Payroll Software Costs UK: 2026 Pricing & Budgeting Guide

The cost of reliable payroll software in the UK tends to vary according to how many employees you have and how many features you need. Small businesses can expect to pay somewhere between £30 and £80 per month. Enterprises with large payroll teams, on the other hand, can end up paying thousands per month for payroll software.

However, in 2026, the real cost of payroll isn’t just the software licence — it’s the ongoing labour required to manage payroll manually. Leading payroll platforms automate calculations, tax submissions, pension compliance, and reporting tasks that would otherwise consume hours of admin time each pay cycle.

In this article, we’ll give you some specific price points you can use to make the right decision for your business, as well as some information on the alternatives worth considering if it’s a little bit out of your budget.

Typical Payroll Software Costs

A standard payroll software pricing structure includes a flat monthly fee and a per-employee monthly fee, so prices can vary significantly depending on the size of your business.

Here’s what you can expect to pay based on the size of your business:

• Payroll software for small businesses: £16 to £32 per month, plus £2 to £5 per employee that is paid through the software.
• Payroll software for medium-sized businesses: £24 to £48 per month, plus £3 to £6 per employee.
• Payroll software for enterprises: Starts around £48 per month plus £5 to £10 per employee, going up to £120 per month, plus £5 to £10 per employee. Some enterprise payroll software requires a minimum number of employees.

Here are some rough estimates of how much you should budget.

• Less than 10 employees: Up to £86 per month.
• Less than 50 employees: Up to £275 per month.
• Less than 100 employees: Up to £640 per month.
• 500+ employees: From £2,500 or more per month.

However, while most payroll software follows a base monthly fee + per-employee model, not all providers price this way. Some platforms roll the “base fee” into a higher per-employee cost.

Deel, for example, typically charges a flat per-employee rate rather than a separate platform fee. Others, such as IRIS, appear to price on a per-payslip basis, meaning costs scale with payroll frequency as well as headcount.

If you want to go a little deeper into the specifics, keep reading.

How much are set-up fees?

Most UK payroll software providers don’t charge a separate setup fee for small businesses, particularly for self-service, cloud-based tools.

Platforms such as Payroo and QuickBooks Payroll typically include onboarding, employee data import, and HMRC setup within the monthly price. That said, setup costs can apply for more complex payroll needs. For example, mid-market or outsourced payroll services could charge anywhere from £100 to £500 for data migration, parallel pay runs, or bespoke configurations.

Payroll Provider Costs Compared

To help you understand how much payroll services might cost you, we’ve rounded up the prices of the leading payroll providers. See how they compare below.

Pricing across payroll providers varies widely depending on whether you’re looking for a simple UK-only payroll tool or a platform built for international teams, with additional accounting and HR functionality.

For example, entry-level options such as Sage and QuickBooks Payroll are among the most accessible for small businesses, with packages starting from £7 and £16 per month. On the other hand, mid-range providers like IRIS Staffology and Payroo charge slightly higher prices for more flexibility and scalability.

Average Cost Scenarios

The table below shows what payroll software typically costs in real-world business scenarios, based on UK pricing estimates. These examples illustrate how payroll software scales with headcount, to help you understand how much it might cost your business to use the leading providers.

How Do Payroll Software Pricing Models Work?

Not all payroll software charges its users in the same way. Understanding the four main pricing models will allow you to select the most cost-effective option for your business.

Subscription-based pricing

Subscription-based pricing typically ranges from £40 to £160+ per month, plus £2–£10 per employee.

This is the most straightforward pricing model. You choose a subscription plan and pay a fixed amount every month. These plans either include a set number of employees (for example, a maximum of 10) and charge extra for any additional employees, or offer a set price regardless of how many employees need to get paid via the software. This structure is ideal for businesses with stable employee counts.

Per employee pricing

This is the most common pricing model for payroll. You’re charged a monthly base rate for use of the software in general, and then an additional monthly rate for each employee getting paid. This model works well for all business sizes, though you may find that the cost per payslip decreases the more payslips you add to the subscription.

Base fees can range from £16 to £120 per month, with an additional cost per employee of around £2 to £10.

Pay-as-you-go

A less common option is pay-as-you-go (PAYG) payroll software, which offers a flexible pricing model that allows businesses to pay only for the services they use, without being locked into a fixed monthly or annual subscription. This usually values consumption based on factors like the number of employees processed, specific features utilised, or the frequency of payroll runs.

This model is particularly beneficial for small businesses, startups, or companies with fluctuating payroll needs, as it provides the ability to scale services up or down based on current requirements.

However, it might be more expensive over the long run, given the flexibility it provides. Prices often have a fixed starting price, followed by a cost per payslip, in a similar manner to the fixed fee, and can range between £50 to £200+ per month.

One-off purchase

One-off payroll software licenses typically cost between £800 and £8,000, though this model is becoming rare.

With this model, you pay only once for a payroll software license and then install the software directly on your servers. This is best for large businesses wanting control over their data and long-term cost savings.

Since major payroll software providers like Rippling typically offer custom pricing, price estimates are rough.

Free

Free payroll software typically provides businesses with only core features for running payroll, such as payslip generation. It’s ideal for micro businesses or startups with fewer than 10 employees, since most free payroll software won’t let you process payslips for more than 10 people.

This means that if your team grows, you may end up paying if you need additional payslips, features, or services.

What Hidden Costs and Fees Should I Expect?

There’s often more than meets the eye with payroll software costs. Whether you go with a free plan or an enterprise suite, hidden costs tend to sneak in. Here are some common hidden costs to factor in when making your budget.

Setup fees

Whether you’re starting from scratch or switching from a different payroll software provider, the setup process can be complicated. A service rep is often needed to install and configure the software and migrate data from your previous systems. Unless free setup is specifically mentioned on your provider’s website, you should be ready to pay for this service. Usually, the larger your business, the higher the setup fees.

Minimum monthly fees

Some payroll software providers require businesses to pay a “minimum monthly fee,” but don’t always disclose this.

This means, for example, that if you choose a software with a per-employee pricing model, you might need to pay for a minimum number of employees, even if that number exceeds the number of employees you’re processing payroll for.

Multi-company management

Some payroll solutions are designed for managing payroll across multiple companies. These software options offer features like payroll timetables with alerts and reminders and a secure client interface to reduce administration and errors.

Add-on services and features

These are additional add-on features that provide enhanced functionality beyond what’s normally offered in your selected plan. Paid add-on features can include:

• Advanced reporting and automation
• HR management
• Talent management
• Employee time tracking
• Custom integrations for enterprises with heavy existing software infrastructure
• International payroll
• Earned wage access

Add-on services and features are either one-off fees or extra monthly charges.

Enhanced customer support

Most payroll software comes with standard customer support—but that might not be enough for complex businesses. For an additional monthly subscription, you can add things like 24/7 assistance, dedicated account managers, or in-depth employee training sessions. Professional onboarding can make sure you are acquainted with the software instead of learning the tools on the fly.

What Are the Risks of Cheap Payroll Software?

Low-cost payroll software can look appealing, especially for businesses operating on slightly tighter margins. However, in many cases, paying slightly more for a payroll platform with stronger safeguards is a safer and more cost-effective decision in the long run.

Budget tools often lack advanced validation features such as AI-driven anomaly detection — a tool that flags unusual changes to tax codes, NI contributions, or pay patterns before submissions are made. If you choose to sacrifice these features and payroll is filed incorrectly, penalties from HMRC can far exceed the money saved on subscription fees.

There’s also the less visible — but potentially far more serious — risk of data breach costs. Cheaper software may not meet modern security standards, such as strong encryption and role-based access controls. This leaves highly sensitive employee information, like bank details and National Insurance numbers, vulnerable to unauthorised access, exposing your business to significant financial penalties as well as potential reputational damage.

What Are the Alternatives to Payroll Software?

If payroll software is too expensive, not powerful enough to meet your needs, or too powerful for your needs, there are other ways to tackle the payroll problem.

Outsourced payroll services

For some businesses, running payroll in-house simply isn’t worth the trouble. But by using a specialised, third-party payroll service provider, you can cleanly outsource setup, regular payroll processing, tax filings, and anything else payroll-related.

Monthly costs aren’t necessarily higher with a fully or partly managed payroll service, especially for businesses with over 50 employees. Outsourcing payroll is also a time-saving expense for many businesses.

For more details on the cost of outsourcing payroll, see our full pricing guide.

Manual payroll processing

You could use the old-school method of doing everything manually. This involves keeping track of all payroll data—including bonuses, promotions, and tax requirements—on an Excel spreadsheet.

Though it’s cheap, we don’t recommend this method, since it’s prone to errors and could result in penalties for incorrect information. That’s one of the key advantages of payroll software – it helps ensure compliance without you really having to think about it.

You’ll also miss out on useful features like employee self-service apps, automated payslips, and audit trails if you pursue this option. While manual payroll may look like a direct money saver, it typically costs far more in administrative time, stress, and potential compliance exposure as your business grows.

Contractor payments

Benefits, tax withholdings, and worker protections don’t apply to contractors—only employees. Hiring primarily contractors instead of employees can greatly simplify the payroll process, allowing you to cut out payroll software from the equation, or at least use a lower-tier, less expensive payroll software plan.

Who Should Use Payroll Software?

Any-sized business can benefit from using payroll software, from micro businesses with fewer than 10 employees to large enterprises. That’s because it reduces errors and manual work time, and helps ensure payroll runs on time.

That said, mid-sized businesses (ones with 50 to 200 employees) might be better off outsourcing payroll to professionals rather than running it in-house using software. That’s because it’s generally cheaper and far less time-consuming for businesses of this size to outsource payroll to a third party.

Once a business reaches enterprise level, it generally has the budget to hire an in-house payroll team, which allows it full control over an often increasingly complex payroll process.

Payroll Cost FAQs