Payroll Outsourcing Costs UK 2026: Prices Per Employee & Managed Payroll Fees Quick Answer
Payroll outsourcing in the UK typically costs around £4-£12 per employee per month for a standard managed service
A small business with 10 employees paid monthly might budget approximately £40–£120 per month before any minimum fees, setup costs or additional services. Larger businesses may negotiate lower processing rates per employee, while weekly payroll and complicated pay arrangements can cost more.
Payroll outsourcing service Indicative pricing
Basic payroll bureau processing
From around £2–£5 per employee or payslip
Standard managed payroll
Approximately £4–£12 per employee/month
Very small payroll
Often subject to a minimum monthly charge
Fully outsourced, complex payroll
Tailored quote based on requirements
Setup and migration
Included or charged separately
These are indicative UK budgeting ranges, not fixed prices or guaranteed quotations. Per-payslip pricing should be calculated against your actual number of pay runs.
Our View: The cheapest payroll outsourcing quote is not necessarily the best value. Compare the total annual cost, including pension administration, HMRC submissions, employee changes, year-end processing and support.
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Key Takeaways
Managed payroll outsourcing commonly costs around £4–£12 per employee per month, depending on the service.
Businesses with very few employees may pay a minimum monthly fee rather than a simple per-person rate.
Weekly payroll can cost considerably more than monthly payroll where charges apply per payslip or pay run.
More complicated payrolls involving overtime, bonuses, pensions or several pay schedules may cost more.
Setup, payroll migration, year-end processing and employee changes are not always included.
Businesses should compare payroll bureau services with fully managed payroll rather than treating them as identical.
Outsourcing can reduce internal administration, but the employer retains important legal responsibilities.
Our View: Calculate first-year and ongoing annual costs before deciding whether to outsource payroll.
How Do We Work?
Our comparisons are researched and reviewed by the Compare Your Business Costs editorial team using provider information, published pricing and UK business buying criteria. See how Compare Your Business Costs works .
Authored by: Ally Cox – Business Technology & B2B Services Specialist, 10+ years’ experience.
Last Updated: November 2026
Contents
How Much Does Payroll Outsourcing Cost in the UK? Most outsourced payroll providers calculate their fees based on the number of employees processed, the frequency of pay runs and the amount of payroll administration they handle.
For businesses with straightforward monthly payroll, a useful starting budget is approximately £4–£12 per employee per month for managed processing.
However, pricing can differ significantly between:
A payroll bureau that processes information supplied by your business.
A managed provider that calculates payroll, prepares reports and handles agreed submissions.
A fully outsourced service that also manages more complex processes, enquiries and administration.
Typical UK Payroll Outsourcing Price Ranges
Service level Indicative cost What to check
Basic bureau processing
Approximately £2-£5 per employee/payslip
Who prepares and checks payroll data?
Standard managed payroll
Approximately £4-£12 per employee/month
Are RTI, pensions and year-end tasks included?
Complex managed payroll
Quote-based
Are several pay groups and integrations included?
Enterprise payroll outsourcing
Custom commercial agreement
What implementation, service and reporting charges apply?
Our View: Do not compare a basic £3-per-payslip bureau quote directly with a £9-per-employee fully managed quote. They may involve very different responsibilities and levels of support.
Compare Managed Payroll Providers
Payroll Outsourcing Costs by Number of Employees The following table illustrates what a business could budget for a standard monthly managed payroll using the £4–£12 per-employee range.
Employees Indicative monthly cost Indicative annual cost
5
£20-£60*
£240-£720*
10
£40-£120
£480-£1,440
20
£80-£240
£960-£2,880
50
£200-£600
£2,400-£7,200
100
£400-£1,200
£4,800-£14,400
250
£1,000-£3,000
£12,000-£36,000
*The five-employee illustration excludes any provider minimum charge. All figures are simple budgeting calculations for 12 monthly pay runs, not provider quotations. Actual rates may be lower at scale or higher for complicated payrolls. Setup, VAT and additional fees are excluded.
Why Do Larger Businesses Sometimes Pay Less Per Employee? Providers may offer volume-based pricing because a larger workforce allows processing and administration costs to be spread across more employees.
However, a 100-person business with monthly salaried employees may have a much simpler payroll than a 50-person hospitality business with weekly pay, overtime, multiple sites and frequent employee changes.
Our View: Headcount is an important pricing factor, but payroll complexity is often what determines whether a quoted per-employee rate represents good value.
How Do Payroll Outsourcing Companies Charge? UK payroll outsourcing companies use several common pricing structures.
1. Per Employee Per Month The provider charges a fixed fee for each employee processed during the month.
For example:
20 employees × £7 per month = £140/month.
This model is useful for businesses with a relatively predictable workforce and monthly pay schedule.
2. Per Payslip or Payroll Run Some providers charge for each payslip generated or apply a fee every time payroll is processed.
This can be important for weekly-paid businesses, because they may require 52 pay runs annually rather than 12.
3. Fixed Monthly Payroll Fee A payroll bureau or accountant may offer a fixed monthly package, sometimes with an employee limit.
This can simplify budgeting, but check what happens if your workforce grows or you need an additional payroll run.
4. Custom Managed Payroll Pricing More complex organisations may receive a tailored quote incorporating processing, integrations, migration, reporting and support.
Our View: Always ask whether the quote is charged per employee, per payslip, per pay run or per payroll group. These can produce very different annual costs.
What Is Included in Payroll Outsourcing? The scope of outsourced payroll varies by provider and a managed service may include:
Calculation of employee gross and net pay.
PAYE income tax and National Insurance calculations.
Student loan and other payroll deductions.
Production of digital payslips.
HMRC Real Time Information submissions.
Starter and leaver processing.
Workplace pension deductions and administration.
Statutory pay calculations.
Year-end reports and P60s.
Payroll reports and accounting journals.
Additional services may include BACS payment files, employee support, HR integration, salary sacrifice administration and specialist reporting.
What Does the Employer Still Need to Do? Even where payroll is outsourced, the employer remains responsible for meeting its legal obligations so depending on the agreement, the business may still need to:
Provide correct employee information.
Submit hours, overtime, bonuses and other pay changes.
Approve payroll before processing.
Ensure employees are paid correctly and on time.
Meet PAYE and workplace pension responsibilities.
Maintain appropriate records and internal controls.
HMRC generally requires a Full Payment Submission (FPS) on or before the employee’s payday, subject to limited exceptions.
Official guidance: GOV.UK – Reporting Payroll to HMRC .
Our View A fully managed service can substantially reduce payroll administration, but it does not eliminate the employer’s responsibilities.
Before signing, agree exactly who handles data collection, payroll approval, submissions, payments and error correction.
Compare Fully Managed Payroll Services
Payroll Outsourcing Cost Examples The following examples demonstrate how outsourcing charges can work for different UK businesses.
Example 1: Small Business With 10 Employees Assume:
10 employees.
Monthly payroll.
£7 per employee per month.
£75 one-off setup fee.
No additional charges.
Cost Amount
Monthly payroll processing
£70
Annual payroll processing
£840
One-off setup
£75
First-year total £915
Illustrative figures, excluding VAT.
Our View: For a business of this size, compare the £915 first-year outsourced estimate against payroll software costs and the time currently spent preparing and checking payroll.
Example 2: Growing Business With 50 Employees Assume:
50 employees.
Monthly payroll.
£6 per employee per month.
£300 one-off implementation.
Included standard HMRC and pension processing.
Cost Amount
Monthly payroll processing
£300
Annual processing
£3,600
Implementation
£300
First-year total £3,900
Illustrative figures, excluding VAT.
Our View: At 50 employees, payroll processing, pension administration and reporting can consume meaningful internal time. A managed service may be attractive if it removes regular work from the finance or HR team.
Example 3: Weekly Payroll With 25 Employees Assume:
25 employees.
Weekly payroll.
£4 per payslip.
52 payroll runs per year.
25 employees × £4 × 52 weeks = £5,200 annually.
The same per-payslip fee for 12 monthly runs would be 25 × £4 × 12 = £1,200 annually.
These calculations deliberately isolate pay frequency. Actual providers may use discounted weekly rates or a different pricing model.
Our View: A weekly payroll quote should always be converted into an annual figure before comparison. A low cost per payslip can become expensive when it is charged every week.
The advertised processing rate may not include every service your business needs.
Potential charge What to ask
Setup and onboarding
Is initial implementation included?
Payroll migration
Will existing employee and year-to-date records be transferred?
Workplace pensions
Are assessments, submissions and communications included?
Starters and leavers
Are employee changes charged separately?
Additional payroll runs
What happens if an extra pay run is needed?
Corrections
Are re-runs and amended payrolls charged?
Year-end processing
Are P60s and final submissions included?
P11Ds and benefits
Are benefits-related services included or separately quoted?
Payment processing
Are BACS files and payment administration included?
HR/accounting integration
Is integration setup or ongoing access charged?
Employee portal
Is payslip access included?
Contract exit
Will data export or early termination cost extra?
Our View Ask every provider for a complete first-year quote and a separate ongoing annual quote.
A £5-per-employee rate with several additional charges may work out more expensive than a £7-per-employee package that includes the services you actually need.
Does Weekly Payroll Outsourcing Cost More Than Monthly Payroll? It often does, particularly when a provider charges per payroll run or payslip.
Consider a business employing 20 people:
Pay frequency Annual payslips Cost at £4/payslip
Monthly
240
£960
Four-weekly
260
£1,040
Fortnightly
520
£2,080
Weekly
1,040
£4,160
Illustrative constant per-payslip price. Actual provider rates and minimum charges may differ by pay frequency.
Weekly payroll is common in sectors such as hospitality, construction, recruitment and some parts of retail.
These businesses may also have more variable hours, overtime and employee changes, which can increase processing requirements.
Our View: Businesses with weekly payroll should prioritise providers experienced in variable pay and ask for a fixed annual price covering their real pay schedule.
Is Outsourcing Payroll Cheaper Than Running It In-House? Not always. The answer depends on workforce size, payroll complexity and the cost of the internal time required.
In-House Payroll Costs Running payroll internally may involve:
Payroll software licences.
Employee or finance-team time.
Training and ongoing regulatory updates.
Reporting and reconciliation.
Cover during absence.
Correcting payroll mistakes.
Outsourced Payroll Costs Outsourcing may replace some of those internal tasks with:
A recurring managed-service fee.
Setup or migration charges.
Additional fees for specialist work.
Internal time needed to provide and approve payroll information.
Worked Comparison Suppose a 20-person business spends six hours per month on payroll administration, with internal time valued at £25 per hour.
Estimated internal time cost 6 hours × £25 = £150/month.
Assume its payroll software costs another £25/month.
Illustrative in-house cost: £175/month.
If a suitable outsourced service costs £7 per employee 20 × £7 = £140/month.
The outsourced option is £35/month lower in this simplified example, before implementation costs, retained internal work or additional fees.
Our View: Outsourcing is not automatically cheaper, but businesses should compare the total time and resources used internally rather than looking at the payroll software subscription alone.
Payroll Outsourcing Costs by Business Type Two businesses with the same number of employees can receive different payroll outsourcing quotes.
Business type Potential cost drivers
Professional services
Monthly salaries, bonuses, pension contributions
Retail
Part-time staff, overtime, several locations
Restaurants and hospitality
Weekly pay, shifts, tips, service charges, frequent staff changes
Care homes
Variable shifts, night pay, overtime, multiple pay rates
Construction
PAYE, CIS administration, variable hours and subcontractors
Recruitment agencies
High-volume or frequent payroll processing
Multi-site businesses
Multiple payroll groups, reporting and integrations
Our View Businesses with complex working patterns should compare providers on industry experience as well as price.
A low-cost bureau may be sufficient for ten employees receiving predictable monthly salaries but less suitable for a workforce with weekly shifts, overtime, commission and frequent starters or leavers.
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Which Payroll Outsourcing Providers Should You Compare? The best provider depends on the size and complexity of your payroll, the support required and whether you want a bureau or fully managed service.
Provider Worth comparing for Pricing approach
Moorepay
SMEs wanting managed payroll and related support
Tailored quote
IRIS
Small to mid-sized employers and payroll bureau options
Package and service dependent
SD Worx
Managed payroll and more complex organisations
Tailored quote
ADP
Growing and larger employers, multi-country requirements
Tailored quote
MHR
Organisations seeking payroll with HR integration
Tailored quote
Zellis
Larger employers and complex payroll operations
Tailored quote
Independent payroll bureaus
Small businesses wanting straightforward outsourced processing
Per-payslip, monthly minimum or custom quote
This is a comparison shortlist, not a ranking based on independently tested service performance. Confirm each provider’s current service scope and suitability before requesting quotes.
Our View For small and straightforward payrolls, compare independent bureaux and SME-focused managed services before choosing a large enterprise platform.
For businesses with several entities, complex pay or substantial integration needs, larger managed-payroll providers may offer features that justify higher implementation and service costs.
For a broader comparison, see our UK Payroll Services Guide .
Can You Change Payroll Outsourcing Providers Mid-Year? Yes. Businesses do not necessarily need to wait until the beginning of a new tax year to switch outsourced payroll providers.
However, the transfer should be carefully planned to avoid errors in employee pay and HMRC records.
Before switching, check:
Employee and payroll data migration.
Year-to-date PAYE and National Insurance figures.
Pension records and contribution information.
Existing payroll schedules and pay dates.
Outstanding corrections or adjustments.
First-run checks and approval procedures.
Data access and contract exit terms.
Our View: Ask whether migration and a parallel or test payroll run are included in the implementation quote. A cheaper service is poor value if the transition causes payroll errors or payment delays.
How to Compare Payroll Outsourcing Quotes To receive meaningful prices, give each provider the same information about your business.
What Information Will Providers Need?
Number of employees.
Monthly, weekly, fortnightly or four-weekly pay frequency.
Number of payroll groups.
Expected starters and leavers.
Whether employees receive overtime, bonuses or commission.
Workplace pension requirements.
Any CIS or specialist payroll arrangements.
Required HR or accounting integrations.
Current payroll provider or software.
Preferred implementation date.
What Should Every Quote Include?
Cost item What to compare
Base monthly fee
Minimum charge and included employees
Employee processing fee
Cost per employee, payslip or pay run
Implementation
One-off setup and migration costs
HMRC submissions
What’s included in RTI and year-end services?
Pensions
Assessment and contribution administration
Additional work
Corrections, extra runs and employee changes
Support
Named contact, response times and service levels
Contract
Minimum term, increases, renewal and exit charges
First-year cost
All recurring charges plus implementation
Our View Ask providers to calculate the complete cost of your normal payroll year.
A quote based only on the number of employees can miss the fees that matter most to your business.
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Our Verdict: Is Payroll Outsourcing Worth the Cost? Payroll outsourcing can offer good value for UK businesses that spend substantial time processing payroll or need specialist support with changing payroll requirements.
For small businesses with simple monthly pay, a basic payroll bureau or software package may be sufficient.
For growing businesses, weekly-paid workforces and organisations with complex payroll arrangements, a managed service may reduce internal administration and provide access to specialist expertise.
CYBC Verdict Our recommendations are:
1–5 employees: Compare minimum bureau charges against payroll software and accountant-provided services.5–20 employees: Compare managed payroll on total annual cost and included services.20–100 employees: Consider the cost of internal payroll administration, pension work and employee changes.100+ employees: Request tailored quotes covering reporting, integration, support and implementation.Weekly or complicated payroll: Prioritise provider experience and annual processing cost, not just the lowest price per payslip.
The most useful comparison is not simply “How much does payroll outsourcing cost per employee?”
It is:
“What will it cost to process our actual payroll accurately across a full year?”
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Payroll Outsourcing Costs FAQs How much does payroll outsourcing cost in the UK? Standard managed payroll services often cost around £4–£12 per employee per month, although minimum charges, pay frequency, setup and specialist administration can increase the total.
How much does outsourced payroll cost for 10 employees? Using an indicative £4–£12 monthly per-employee range, ten employees could cost approximately £40–£120 per month before setup or additional fees.
How much does outsourced payroll cost for 50 employees? At £4–£12 per employee per month, a 50-person monthly payroll would cost approximately £200–£600 monthly, excluding additional charges. Actual volume pricing may differ.
Is it cheaper to outsource payroll or do it yourself? Running payroll internally may have lower direct software costs, but outsourcing can reduce the time spent on payroll administration. Compare software, staff time, support and the outsourced service fee.
How much does a payroll bureau charge per payslip? Some UK payroll bureaux advertise processing from a few pounds per payslip, while others apply monthly minimum charges or broader managed-service rates.
Does weekly payroll outsourcing cost more? Often, particularly when the provider charges per pay run or payslip. Businesses should compare the total cost across the year’s pay schedule.
Are payroll setup fees included? Not always. Some providers include onboarding, while others charge separately for employee data migration, configuration and testing.
Does outsourced payroll include workplace pensions? It depends on the service. Some managed payroll packages include pension assessments and submissions, while other providers charge separately for pension administration.
Does payroll outsourcing include HMRC submissions? Many managed payroll services include regular RTI reporting, but confirm the exact scope of FPS, EPS and year-end processing in your agreement.
Can I outsource payroll but keep HR in-house? Yes. Many businesses outsource payroll processing while retaining their HR function and employee-management responsibilities internally.
Can small businesses outsource payroll? Yes. Small employers can use accountants, payroll bureaux and managed services. However, minimum monthly charges can make the effective cost per employee higher for very small teams.
Can I switch payroll providers during the tax year? Yes, provided payroll records, employee information and year-to-date figures are transferred accurately and the new provider is ready before the next processing deadline.
What should I look for in a payroll outsourcing quote? Compare processing fees, minimum charges, setup, pensions, statutory payments, HMRC submissions, employee changes, reporting, support, contract length and first-year cost.
Related Payroll Guides
Compare Payroll Outsourcing Quotes Whether you are outsourcing payroll for the first time or looking to replace your current provider, comparing quotes can help you identify the right service level and understand the total annual cost.
Compare UK payroll providers based on employee numbers, pay frequency, administrative requirements and budget.
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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.
