Payroll Services Cost for UK Businesses (2024)

Payroll is more than just making sure your team gets their money on time every month. Payroll involves calculating and distributing salary to your employees, issuing payslips, reporting internally and to bodies like HMRC where required, managing NI and other payments, and providing crucial paperwork like P60s and P45s.

If that sounds like a lot of work you may be wondering about payroll outsourcing, and what different sorts of payroll services cost. This guide covers the basics of fully managed payroll services versus part managed payroll, payroll outsourcing cost and more.

We’ll also briefly touch on Wise Business as a smart, low cost way to manage your international payroll in multiple currencies with the mid-market rate.

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Fully managed payroll vs part managed payroll

When it comes to payroll services pricing, the most important consideration is the type of payroll service you’re looking for. Generally your options are full managed - also called full service - or part managed payroll.

As you might expect, a fully managed service is likely to cost more than a part managed service - but opting for fully managed payroll outsourcing also is the least stressful option.

With a fully managed payroll service, you’re likely to get an end to end support package which means nobody in your business needs to touch payroll at all. You simply inform your provider the number of hours worked by your employees every month, and leave the rest to them. They’ll take actions which could include:

• Setting up an HMRC compliant payroll processing system that suits your business
• Capturing the payroll data from your business on a weekly or monthly basis
• Calculating and checking things like tax, NI, maternity, sick or paternity pay
• Issuing payslips and disbursing payments to employees
• Reporting internally as required and to HMRC at the end of year filing
• Communicating with your staff about payroll queries
• Providing annual and one off reports such as P45s and P60s

With a part managed solution, you’ll be able to create a tailor made package for your specific needs, which could include modules covering any of the above services. This lets you custom build your package - and fit your budget. However, depending on which services you ultimately decide to outsource, you may still need in-house experts to cover the requirements you choose not to hand over to your payroll provider.

Fully managed payroll services - benefits

Fully managed payroll services can benefit lots of different types of business. Generally if you’re a growing mid-sized business but don’t want to build out a full payroll department just yet, looking at the option of fully managed payroll services may be a good idea. It allows you to hand over this essential part of running your company so you can concentrate on the day job. Benefits include:

• No need to bring in-house payroll specialists
• Most services can integrate with your preferred accounting tools
• Your team can communicate directly with the outsource provider if they have payroll queries
• Your provider deals with HMRC on your behalf
• Many companies offer a full liability guarantee - if there’s a problem with tax filing for example

Part managed payroll services - benefits

A part managed payroll can suit different business types and sizes. The payroll costs per employee will be lower, so it’s a cheaper model, which may work for you if you have a new, small business and can manage some aspects of payroll yourself.

On the other hand, if you have a very large team and want to bring in some in-house payroll experts, this can also be a good way to go. You’ll be able to buy in the resources you need to work alongside your own accounting and finance team, to make sure everything is covered by one or the other. Benefits include:

• Generally outsourced payroll costs less with a part managed option
• You retain more control over your payroll activities
• You can grow your own in-house expertise at your own pace, taking over modules of work from your provider when you’re ready to do so
• Your team won’t need to deal with another company if they have questions about their payslips

Payroll services cost in the UK

Generally, UK payroll outsource services offer tailor made packages to suit the needs of individual companies. This means you can’t compare your options without getting a quote from one or more companies. Usually you’ll need to pay a set up cost, then a price per employee per month.

You can pay just for payroll support, or also add in other services like pension auto enrolment or HR service. Pricing is based on factors including how many people you employ and how often you pay salary. The price per employee is likely to go down the larger the number of employees being paid - while a more frequent payroll run will put costs up.

Some of the main payroll service providers in the UK which you may want to contact for a quote include:

• Moorepay¹
• Payescape²
• MHR Global³
• Papaya⁵

Some of these businesses are UK experts, while others are global companies which can support businesses around the world. There’s no single best payroll outsource provider in the UK, so it’s well worth asking about payroll service costs for the package you’re thinking of from several different providers, and comparing the quotes you’re given.

What can impact the cost of payroll service?

As we’ve mentioned, several factors can change the cost of payroll service. The advantage here is that this gives you great flexibility to pick the provider and the package which suits your needs and budget. Factors which impact the payroll services costs include:

• Whether you need fully or part managed support
• The specific provider you select
• How many employees you have and how often you pay them
• Whether you select a contracted service or pay as you go option
• Where your employees are based - running international payroll is likely to cost more than local payroll only

If you need to pay employees overseas, Wise Business account is a great option to tag along your payroll service. Wise offers international payments with low and transparent fees, and all currency conversions are done using the [mid-market exchange rate](https://wise.com/gb/mid-market-rate), no mark-up added on top.

Get started with Wise Business 🚀

Payroll outsourcing - FAQs

What is the benefit of using an outsourced payroll company?

Using an outsourced payroll company for either an end to end fully managed package or a part managed solution can save you time and reduce the possibility of error in your payroll or HMRC compliance.

Payroll outsourcers employ payroll experts who are able to take over some or all of the aspects of paying staff, reporting, issuing paperwork and dealing with HMRC. There’s a cost involved - but you can save on time and hassle which lets you concentrate on running your company.

Can I run my own payroll in the UK?

You can run your own payroll in the UK if you choose to do so. You might want to do this if you have a very small business, or if you already have specific expertise in payroll or accounting.

What are the steps in the payroll process?

Payroll includes the end to end management of collecting employee hours data, calculating salaries, tax, NI and similar, issuing payslips and disbursing funds, and communication with HMRC where needed.

It’s a multi-step process which can be time consuming - and create problems if there are mistakes anywhere along the line. That’s why many UK businesses choose to outsource some or all of their payroll activities.

Process international payroll with Wise Business

If you have a UK business and need to process international payments to run payroll for your team members based abroad, you could save time and money with Wise Business.

Wise lets you send money to bank accounts in 160+ countries, with the mid-market exchange rate and low fees. You can make batch payments to pay up to 1,000 people in varied currencies, all at the same time, with just one spreadsheet.

Plus, with Wise you can hold, send, spend and exchange dozens of currencies - and receive payments from others around the world - conveniently and with low or no costs.

Get started with Wise Business 🚀

Payroll is an essential part of growing your business. As soon as you take on team members, understanding how to manage your payroll becomes important, to keep your staff happy and to keep legally compliant. Using an outsourced payroll company can help. Use this guide as a starting point to decide which services may help you, so you can get back to running and growing your company.

Sources used in this article:

Sources last checked 21/06/2024