Payroll Cost Calculator UK 2026: Estimate Monthly Payroll Fees Quick answer
UK payroll costs depend on much more than the number of employees you pay.
Your price can also change according to:
weekly vs monthly payroll
payroll software vs managed service
workplace pensions
CIS subcontractors
variable pay
starters and leavers
HR support
reporting
setup and migration
Use the calculator below to estimate:
monthly payroll cost
annual payroll cost
first-year cost
cost per employee
potential savings against your current provider
Then compare quotes using the same payroll requirements so you are comparing like with like.
Free quotes • No obligation • Compare UK payroll software, managed and outsourced payroll
How Do We Work?
Our comparisons are researched and reviewed by the Compare Your Business Costs editorial team using provider information, official UK guidance and business buying criteria. See how Compare Your Business Costs works .
Authored by: Ally Cox – Business Technology & B2B Services Specialist, 10+ years’ experience.
Reviewed by: James Ward .
Last Updated: September 2026
Payroll Cost Calculator UK Enter your workforce and payroll requirements below.
This calculator provides an estimate rather than a guaranteed provider quote.
Actual prices vary according to provider, payroll scope, employee numbers, pay frequency, setup, integrations and support.
Compare Live Payroll Quotes
Payroll Cost Calculator UK Estimate your monthly payroll cost based on employee numbers, pay frequency, pension duties, CIS, payslips, reports and support level.
Pay frequency
Monthly Weekly Fortnightly Four-weekly Mixed payroll frequencies Weekly payroll usually costs more because it runs more often.
Payroll service type
Payroll software only Managed payroll service Fully outsourced payroll Payroll bureau / accountant Software is usually cheaper; outsourced payroll gives more support.
Business type
Office / admin business Retail / shop Hospitality / restaurant / café Construction / trades Care / healthcare Agency / variable staff Professional services Multi-site business Variable hours, shifts and CIS can increase payroll complexity.
Need workplace pension / auto-enrolment support?
No Basic pension submissions Full auto-enrolment support Includes pension assessment, contributions or pension file uploads.
Need CIS payroll?
No Yes, include CIS Useful for construction businesses paying subcontractors.
Variable pay complexity
Low: fixed salaries Medium: overtime / bonuses High: shifts, tips, commissions or allowances Hospitality, retail and sales teams often need more checks.
Payslip delivery
Digital payslips Employee portal Printed payslips Printed payslips can add admin and postage costs.
Need HR support?
No Basic HR advice Payroll + HR support Useful if you need contracts, absence, holiday or employment advice.
Reporting level
Basic payroll reports Management reports Advanced reports / costing / departments Departmental reporting can be useful for larger teams.
Need year-end support?
Yes No Includes end-of-year payroll checks and employee documents where relevant.
Setup / migration needed?
No setup needed Standard setup / migration Complex migration / multiple payrolls Changing provider mid-year may require extra setup.
Your estimated payroll costs
Estimated monthly cost
£0
Cost per employee/month
£0
Potential monthly saving
£0
Enter your payroll requirements to estimate your costs.
Recommendation will appear here.
This calculator is an estimate only. Actual payroll costs vary by provider, employee count, pay frequency, payroll complexity, pension duties, CIS, HR support, setup, integrations, reporting and service level.
Key Takeaways
Payroll software is normally the cheapest option if you are happy to run payroll internally.
Managed payroll costs more but removes more processing work from your team.
Fully outsourced payroll is usually the highest-cost model because the provider takes on more responsibility.
Weekly payroll generally costs more than monthly payroll because it is processed more often.
CIS, pensions, variable pay and high staff turnover can all increase payroll administration.
Setup and migration can materially increase the first-year cost.
Do not compare payroll providers on price per employee alone.
Compare the annual cost for your real payroll workload.
How Is Payroll Cost Calculated?
Payroll providers use several different pricing models.
Pricing model How it works
Monthly software fee
Fixed subscription for payroll software
Per employee
Additional charge for each employee processed
Per pay run
Charge each time payroll is processed
Per payslip
Charge according to employee/payslip volume
Base fee + employee charge
Common for payroll bureaus and managed services
Custom quote
Common for outsourced and complex payroll
This is why two providers advertising “£3 per employee” can still produce very different annual bills.
What Does Payroll Software Cost? Payroll software is normally the lowest-cost option because your business still does most of the work, so you might need to:
enter employee changes
check hours
run payroll
approve payments
deal with employee queries
manage pensions
HMRC says employers running payroll themselves generally need payroll software capable of reporting PAYE information online unless they are exempt. HMRC maintains a list of recognised free and paid payroll products.
For employers with fewer than 10 employees, HMRC also provides Basic PAYE Tools free of charge.
Our View Software is usually the cheapest financial option, but not always the cheapest operational option.
If payroll takes several internal hours every month, include the cost of that time in your comparison.
What Does Managed Payroll Cost? Managed payroll sits between software and full outsourcing – your provider typically performs more of the processing, while your business still supplies and approves the data.
Pricing will depend on:
employee numbers
pay frequency
number of payrolls
pensions
reports
support level
Our View
Managed payroll can be the best-value option where:
your payroll is growing
you want expert processing
you still want internal control
What Does Fully Outsourced Payroll Cost? Fully outsourced payroll usually costs more because the provider takes responsibility for more of the operational work.
The exact scope varies, but it may include:
payroll calculations
RTI submissions
pensions
statutory pay
employee queries
year-end processing
payroll reporting
Always ask what “fully outsourced” actually includes.
Payroll Software vs Managed vs Outsourced
Software Managed Outsourced
Price
Lowest
Medium
Highest
Internal admin
Highest
Medium
Lowest
Expert support
Software support
High
High
Control
High
Shared
Lower
Best for
Simple payroll
Growing SMEs
Complex/time-poor businesses
Why Does Weekly Payroll Cost More? A monthly payroll normally runs 12 scheduled pay cycles a year – so a weekly payroll can involve 52.
That creates more:
data collection
processing
approvals
RTI submissions
employee queries
A provider might therefore charge more for the same number of employees if they are paid weekly.
How Much Does CIS Add to Payroll Cost? Construction businesses can have additional administration because PAYE employees and CIS subcontractors follow different processes.
CIS services may need to include:
subcontractor verification
CIS deduction calculations
monthly CIS returns
payment and deduction statements
The number of subcontractors can therefore affect your quote even if employee headcount is low.
See our Construction Payroll guide .
How Do Workplace Pensions Affect Payroll Cost? Automatic-enrolment duties begin when an employer takes on eligible staff.
Payroll systems can support tasks including:
employee assessment
pension deductions
employer contributions
pension files
re-enrolment
The Pensions Regulator notes that payroll software can support many of the employer’s automatic-enrolment duties.
Check whether pension administration is included in your payroll quote or charged separately.
Why Do Starters and Leavers Affect Payroll Pricing? Frequent staff turnover creates additional payroll work.
This can include:
starter details
tax codes
P45 processing
final pay
holiday adjustments
employee records
This is particularly relevant to:
hospitality
retail
care
seasonal businesses
How Variable Pay Changes Payroll Costs Fixed salary payroll is generally easier to process than payroll involving:
overtime
bonuses
commission
shifts
allowances
tips
The more checking required each payroll run, the more valuable automation or managed processing becomes.
Payroll Cost by Business Type
Business What usually drives the cost
Professional office
Mostly simple monthly salaries
Retail
Variable hours + starters/leavers
Hospitality
Weekly pay + shifts + tips
Construction
PAYE + CIS
Care
Shifts + overtime + allowances
Sales
Commission + bonuses
Multi-site
Reporting + locations + approvals
Our View: Headcount Alone Is a Poor Payroll Cost Measure Consider two businesses with 20 employees.
Business A
20 monthly salaried employees
stable workforce
standard pension
Business B
20 weekly paid employees
variable shifts
regular overtime
frequent starters/leavers
Business B is likely to create much more payroll work despite having exactly the same employee count.
This is why our calculator includes payroll complexity as well as headcount.
First-Year Payroll Cost vs Ongoing Cost A payroll quote can have two different cost profiles.
One-Off Costs
setup
implementation
migration
data cleansing
integration
Ongoing Costs
monthly service fee
employee charges
pay-run fees
pension processing
support
HR modules
Compare first-year cost separately from the normal annual cost.
How Much Does Switching Payroll Provider Cost? Switching provider can involve:
employee data migration
year-to-date payroll figures
pension data
tax codes
payroll history
testing
Mid-year switching may require more migration work than moving at the start of a tax year – however, that does not mean you should stay with a poor provider until April.
How to Compare Payroll Quotes Properly Give every provider the same information, so include:
employee numbers
pay frequency
number of payrolls
pension requirements
CIS subcontractors
starters/leavers
variable pay
payslip method
reporting
HR support
migration requirements
Then compare:
monthly cost
annual cost
first-year cost
cost per employee
what is included
Compare Payroll Quotes
Hidden Payroll Fees to Check Before signing, ask whether your quote includes:
setup
migration
employee fees
additional pay runs
weekly payroll
pension administration
CIS
starters and leavers
printed payslips
year-end processing
P60s
reports
employee portal
HR advice
integrations
support
exit fees
How to Work Out Payroll Cost Per Employee Use:
Total monthly payroll cost ÷ number of employees
For example:
Monthly payroll service: £180
Employees: 30
Cost per employee:
£6/month
This can be useful for comparing providers, but it should not be used alone.
A £4-per-employee service with several additional charges can cost more than an all-inclusive £6 service.
How to Work Out Your Payroll Saving If you already have a provider:
Current monthly cost – new monthly quote = monthly saving
For example:
Current provider: £300/month
Alternative: £240/month
Monthly saving:
£60
Annual saving:
£720
But check setup and migration before assuming the first-year saving will also be £720.
When Should You Compare Payroll Providers? We would compare providers if:
your payroll costs have risen
your workforce has grown
you have moved to weekly payroll
you now use CIS subcontractors
payroll is taking too much internal time
payroll errors are increasing
you need better pension support
you need HR and payroll together
your current contract is ending
Is Free Payroll Software Enough? It can be for a very small business.
HMRC’s Basic PAYE Tools is currently free for employers with fewer than 10 employees.
It can perform core payroll functions including:
PAYE calculations
National Insurance calculations
payroll submissions to HMRC
HMRC also maintains a wider list of recognised free and paid payroll software.
Our View
Free payroll can be perfectly reasonable for a simple microbusiness b ut it should not automatically be compared with managed payroll as though the services are equivalent.
The free route means your business retains the payroll workload.
HMRC Recognition: What It Does and Doesn’t Mean
HMRC publishes recognised payroll software that can report PAYE information online, and they say they do not recommend one recognised product over another.
Recognition tells you the software can perform relevant HMRC reporting. It does not tell you:
which provider has the best support
which interface is easiest
which product has the best pension workflow
which product suits your sector
Our Verdict: How Much Should Payroll Cost? There is no useful universal “average payroll cost” without knowing the workload behind it.
The biggest pricing factors are:
employee numbers
pay frequency
service model
variable pay
pensions
CIS
staff turnover
reporting
migration
Our recommendations:
Simple microbusiness: compare software firstGrowing SME: compare managed payrollTime-poor / complex business: compare outsourced payrollConstruction: include CIS requirementsShift-heavy workforce: include time and attendance integration
Use the calculator to establish a sensible budget, then use actual provider quotes to establish the real market price for your payroll.
Compare UK Payroll Providers
Frequently Asked Questions How much does payroll cost in the UK?
Payroll costs depend on employee numbers, pay frequency, complexity and whether you use software, managed payroll or full outsourcing. There is no single price that applies to every business.
What is the cheapest payroll option?
Running payroll internally using payroll software is normally the cheapest direct-cost option for a small and straightforward payroll.
Is there free UK payroll software?
Yes. HMRC provides Basic PAYE Tools free for employers with fewer than 10 employees, and HMRC also lists other recognised free payroll products.
Does weekly payroll cost more?
It often does because the payroll is processed more frequently, creating more pay runs, submissions and administration.
How much does outsourced payroll cost?
Outsourced payroll is usually quote based and depends on headcount, frequency, complexity and the amount of work the provider handles.
Does CIS increase payroll costs?
It can. Construction businesses may need subcontractor verification, deduction processing, CIS returns and payment statements alongside normal PAYE payroll.
Does workplace pension support cost extra?
It depends on the provider. Some packages include pension processing while others charge separately, so this should be confirmed in the quote.
How do I compare payroll providers?
Give every provider the same workforce and payroll requirements and compare first-year cost, annual ongoing cost, employee charges, setup, support and what is included.
Should I compare payroll cost per employee?
Yes, but use it alongside total annual cost. A lower per-employee figure can be misleading if several additional fees apply.
Can I change payroll provider mid-year?
Yes. Accurate year-to-date data needs to be migrated, but businesses do not have to wait for the start of the next tax year to change pr
Related Payroll Guides
Hi, I’m Ally Cox , a senior copywriter and blogger at CompareYourBusinessCosts.co.uk, the UK’s trusted platform for comparing business services.over a decade of experience in the B2B sector, I specialise in simplifying complex topics like leased lines, VoIP, business energy, HR and payroll solutions, accounting software, and EPOS systems .HR, copywriting, and business operations- from clocking-in systems to card machines and office technology .informed, confident decisions when choosing products and services that improve efficiency and save money.
