Updated for 2026/27 tax year
Best Payroll Software for UK Small Businesses (2026)
Running payroll in the UK means dealing with RTI submissions, auto enrolment, employer NI at 15%, and a raft of statutory payments. The right software handles all of this automatically — the wrong choice costs you hours every pay run. Here's what we'd actually recommend.
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What to look for in UK payroll software
Every payroll package you consider should be HMRC-recognised — that means it can file Real Time Information (RTI) submissions directly. Without this, you're doing extra work every pay run and risking penalties.
Beyond RTI, the key features for most small businesses are:
- Auto enrolment — pension staging duties apply to almost all employers. The software should calculate contributions and file with your pension provider.
- Statutory payments — SSP, SMP, SPP and ShPP calculations should be automatic. Getting these wrong is a common compliance failure.
- Employer NI calculations — the rate is 15% above £5,000 for 2026/27. Software should handle age-based thresholds (under-21s, apprentices) automatically.
- Employment Allowance — up to £10,500 off your employer NI bill. Should be a simple tick-box in any reputable package.
Use our Employer NI Calculator and Employee Cost Calculator to get your numbers before you commit to any software — you'll know exactly what figures to expect in your first payroll run.
Quick comparison
| Software | Price | HMRC RTI | Auto enrolment |
|---|---|---|---|
| Xero | From £16/mo | ||
| QuickBooks | From £8/mo | ||
| Sage 50 | From £12/mo | ||
| BrightPay | From £69/yr | ||
| FreeAgent | From £19/mo | ||
| HMRC Basic PAYE | Free |
Xero Payroll
Best for businesses already using Xero accounting
Included in Xero plans from £16/month
30-day free trial
Pros
- Fully integrated with Xero accounting — no re-keying of journals
- RTI submissions to HMRC built in
- Auto enrolment and pension filing included
- Good mobile app for payslip access
Cons
- Only worth it if you use Xero for accounting too
- Limited payroll-only plan — need a full Xero subscription
Best for
Businesses using Xero for bookkeeping who want one system for everything.
QuickBooks Payroll
Best all-rounder for small businesses
From £8/month for payroll add-on
30-day free trial
Pros
- Intuitive and easy to set up without payroll experience
- Auto-calculates NI, income tax, and student loan deductions
- Built-in RTI filing
- Good integrations with QuickBooks accounting
Cons
- Some advanced features (pension auto enrolment) cost extra
- Price can creep up as you add employees
Best for
First-time payroll operators who want something that just works without an accountant holding their hand.
Sage 50 Payroll
Best for established businesses with complex payroll
From £12/month (up to 5 employees)
30-day free trial
Pros
- Extremely comprehensive — handles Directors' NI, SMP, SSP, CIS
- HMRC-recognised, used by payroll bureaux across the UK
- Strong support and training resources
- Handles complex pay structures: shifts, overtime, variable pay
Cons
- Steeper learning curve than cloud alternatives
- Desktop-first software (not fully cloud-based)
- Overkill for a business with 1–3 employees
Best for
Businesses with 5+ employees, complex pay structures, or those who want the most established name in UK payroll.
BrightPay
Best value — favourite of UK accountants
From £69/year (up to 3 employees)
Free for up to 3 employees (with limitations)
Pros
- Extremely well regarded by UK accountants and payroll bureaux
- Full auto enrolment and pension submission built in
- Handles SMP, SPP, SSP, ShPP automatically
- Annual flat fee — not per-employee per-month pricing
- Excellent HMRC RTI track record
Cons
- Desktop software (Windows-only for full version)
- Less polished UI than cloud alternatives
- Not ideal if you want everything in a browser
Best for
Cost-conscious small businesses or their accountants who want professional-grade payroll without cloud subscription pricing.
FreeAgent
Best for freelancers and micro-businesses
Included in FreeAgent subscription (from £19/month)
30-day free trial
Pros
- Payroll bundled with accounting, invoicing, and tax returns
- Very clean and simple interface
- RTI submissions handled automatically
- Free if you bank with NatWest, Royal Bank of Scotland, or Ulster Bank
Cons
- Auto enrolment not included — need a separate pension solution
- Limited for businesses with more than 5–10 employees
Best for
Sole traders, freelancers, or micro-businesses who want all their finance admin in one clean app.
HMRC Basic PAYE Tools
Best free option for very small employers
Free
N/A — permanently free
Pros
- Completely free, provided directly by HMRC
- RTI filing built in
- No subscription cost ever
Cons
- Very basic — no payslips, no auto enrolment, no accounting integration
- Clunky interface
- Limited to 9 employees
- No support beyond HMRC documentation
Best for
Employers with 1–3 employees who are comfortable with payroll basics and want to minimise cost.
Check your employer NI costs before you hire
Before choosing payroll software, it helps to know what your employer NI bill will actually be. The 2026/27 rate is 15% on earnings above £5,000. For a team of five on £30,000 each, that's £18,750 in employer NI alone — before pension contributions.
Frequently asked questions
Do I legally need payroll software?
Not strictly — you can do payroll manually and file RTI to HMRC by hand using their online tools. But for almost any employer with more than one or two employees, software pays for itself in time saved within the first month.
What is RTI and why does it matter?
Real Time Information (RTI) is HMRC's system for payroll reporting. You must file a Full Payment Submission (FPS) on or before each pay day. Failure to file on time triggers automatic penalties. All the software on this list files RTI automatically.
Does payroll software handle auto enrolment?
Most do — but check before you buy. FreeAgent and HMRC Basic PAYE Tools do not include auto enrolment as standard. For the rest on this list, pension assessment, contribution calculations, and filing to your pension provider are included.
Can I switch payroll software mid-year?
Yes, but it takes some care. You'll need to import year-to-date figures (gross pay, tax, NI) for each employee so the new software can calculate deductions correctly for the rest of the tax year. Most packages have an import wizard for this.
What's the employer NI rate for 2026/27?
The employer NI rate is 15% on earnings above the Secondary Threshold of £5,000 per year. For employees under 21 and apprentices under 25, no employer NI is due below the Upper Secondary Threshold of £50,270. All payroll software on this list applies these rates automatically. Use our Employer NI Calculator to check your bill before your next pay run.
All prices correct as of June 2026. Always check the provider's website for current pricing. Some links on this page may be affiliate links — this does not affect our recommendations.
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