Xero Payroll: Is It Worth It for Your Business in 2026?

Xero Payroll starts at £37 per month for one employee on the Grow plan (plus £1.50 per additional employee) and rises to £65 per month for up to 10 employees on the Ultimate plan (plus £1 per additional employee).

Xero is a very strong cloud-based accounting software in its own right, outranking every accounting provider we tested except for QuickBooks, due to its leading financial management features. While payroll is included with most Xero accounting plans, its entry-level Ignite plan (£16 per month) does not include payroll by default — you can only use payroll by adding it as an optional extra, and you’ll need to be comfortable with more limited accounting features.

Xero bundles payroll with its cloud accounting packages, making it an affordable all-in-one solution for small businesses. Because payroll is only available alongside its accounting software, it may not be the best option for larger organisations that want a standalone payroll system.

Plan	Monthly cost	Payroll allowance	Best suited to
Grow	£37 per month + £1.50 per additional employee (currently £5.55 for the first 6 months)	Includes payroll for 1 employee	Sole directors or micro-businesses running payroll for the first time
Comprehensive	£50 per month + £1.50 per additional employee (currently £7.50 for the first 6 months)	Includes payroll for up to 5 employees	Small teams with regular payroll and modest reporting needs
Ultimate	£65 per month + £1 per additional employee (currently £9.25 for the first 6 months)	Includes payroll for up to 10 employees	Growing businesses managing payroll for larger in-house teams

Xero’s Simple and Ignite plans aren’t included in the table above, as they don’t include payroll as standard. These plans are aimed at sole traders and very small businesses that don’t yet need to pay employees.

However, payroll can be accessed through the Ignite plan using add-ons, allowing businesses to run payroll without upgrading to Grow. Payroll add-ons typically cost around £1.50 per employee, per month, making Ignite a lower-commitment option for businesses with just one or two staff and minimal payroll complexity.

Xero Payroll Pricing: Expert’s Summary

If you already live in Xero for your bookkeeping, bolting on payroll can look like a no-brainer. The real question is how that per-employee pricing plays out over time.

Xero typically charges a core subscription for the accounting plan, then adds payroll as a separate cost. For example, £5 per month for up to five people and £1.50 for each extra employee, or on some plans, payroll for up to 10 staff is bundled, then £1 per extra person.

On day one, that feels manageable, but if you double headcount, your monthly payroll fee will automatically increase. Xero has also already announced price rises on several plans in 2025, which will hit your budget again, without you changing anything.

I would map out those future-employee scenarios, including the announced increases, and compare that total with a flat-fee payroll provider, before you commit.

Paul Thomas HR and organisational change consultant

Find out more about our Expert author

What is Xero Payroll?

Xero Payroll is a cloud-based payroll software included in Xero’s dedicated accounting platform. The software lets you automate pay runs, calculate wages, PAYE and National Insurance contributions, file reports to HMRC, generate payslips, handle pension deductions, and more.

In short, Xero Payroll takes the administrative work out of paying employees and staying compliant — while also giving you access to its suite of accounting features to manage your finances in one place.

In our independent accounting software research, we tested Xero’s core accounting platform and found it achieved some of the strongest scores overall for operational efficiency and real-time financial visibility.

However, unlike payroll-first solutions like ADP or Staffology by IRIS, Xero Payroll is more limited in scope and advanced payroll functionality, making it better suited to small businesses that want relatively simple payroll alongside clear financial oversight.

Xero Payroll Plans Compared

Xero offers a total of five plans overall, but here we take a look at the tiers that include payroll services as part of their package. Specifically, we compare their costs, feature offerings and who they’re best suited for.

How much does Xero Grow Payroll cost?

Cost: £37 per month (£5.55 per month for the first six months with Xero’s current deals)
Key features: Task automation, performance dashboards, unlimited invoice creation
Who it’s for: Sole traders or small businesses with a very small team

Xero Grow is the provider’s lowest-level tier with Payroll included. While it includes Xero’s full suite of payroll features, it only includes native payment support for one person, making it ideal for very small businesses just starting to hire workers, or limited company directors interested in paying themselves a salary.

What features do you get on the Xero Grow Payroll plan?

Grow gives you essential payroll processing features, allowing you to set up pay calendars, automate tax and pension calculations, manage statutory leave and pay, and file submissions to HMRC — all while integrating the processes into Xero’s accounting software.

Employees can access payslips and leave balances via the Xero Me employee portal, while payroll journals are posted directly into your accounts automatically.

Xero Grow lets you manage statutory pay, taxes, and compliance directly through the software. Source: Expert Market

Is Xero Grow Payroll worth the money?

For very small teams with just one employee, Grow is straightforward and cost-effective, particularly if you value having payroll and accounts in one platform. However, with only one employee included, costs add up quickly if you have multiple staff and have to pay the £1.50 per additional employee.

How much does Xero Comprehensive Payroll cost?

Cost: £50 per month (£7.50 per month for the first six months with Xero’s current deals)
Key features: Multi-currency support, KPI, and ratio tracking, custom metrics
Who it’s for: Established small businesses with a modest team

What features do you get on the Xero Comprehensive Payroll plan?

Aside from everything in Xero Grow, you get to pay up to five employees without additional per-person charges. You also retain access to Xero’s core payroll functionality, while gaining the ability to use multiple currencies, create scorecards tailored to your financial health, and access KPI and ratio analysis for deeper insights.

Is Xero Comprehensive worth the money?

For many small businesses, yes, Xero Comprehensive will be worth the money. It combines payroll and accounting in one system, removing manual entries and saving time. It’s especially strong if you already use Xero for your accounts but want simple payroll without relying on a third-party integration.

How much does Xero Ultimate Payroll cost?

Cost: £65 per month (£9.75 per month for the first six months with Xero’s current deals)
Key features: Advanced accounting tools, project tracking, in-depth analytics
Who it’s for: Small to medium businesses with up to 10 employees

What features do you get on the Xero Ultimate Payroll plan?

Ultimate offers all the payroll features you’d find in the Comprehensive plan, but increases the headcount allowance to 10 employees. You also get access to premium accounting features, like enhanced cash-flow analytics, multi-currency invoicing, expense management for more users, and project tracking.

Xero Comprehensive gives you access to useful financial reporting features, as well as advanced analytics for deeper insights. Source: Expert Market

Is Xero Ultimate Payroll worth the money?

For businesses with a larger team and more complex accounting needs, yes, Xero Ultimate will likely be worth the cost. Ultimate consolidates payroll and full-featured accounting into one place, reducing the need for external tools. It also offers better value per employee as headcount rises, compared with lower tiers like Grow.

How much is payroll with Xero Ignite?

Xero Ignite is the provider’s cheapest tier, priced at £16 per month, or £2.40 per month for the first six months with Xero’s current introductory deal. This entry-level accounting plan doesn’t include payroll by default, but payroll can be added on as an optional extra at £1.50 per employee, per month, on top of the base subscription.

Xero Ignite’s payroll add-on gives you access to Xero’s full core payroll feature set, making it a strong value option for businesses with very small teams.

For example, if you’re paying three employees, payroll with Ignite would cost just £20.50 per month (£16 base fee plus £4.50 in employee charges). In comparison, the same setup on Xero Grow would typically cost £40 per month, as Grow’s higher base price is not offset unless you need its additional accounting features.

That said, Xero Ignite only includes basic accounting functionality, such as limited invoicing, simple reporting and standard bank reconciliation. As a result, the Grow plan is still better suited to businesses that invoice more frequently, want deeper financial insights or expect their accounting needs to become more complex as they scale.

Does Xero Payroll Have a Free Plan?

No, Xero Payroll does not currently have a free plan. However, you can try a Xero plan with payroll features for no cost with its 30-day free trial. You can also get a further two months of free payroll for up to five employees when you add payroll to a Xero plan.

After this initial period, payroll will cost around £1.50 per employee, per month, on top of the price of your base Xero subscription. As a result, the overall cost will vary depending on the plan you choose and the number of employees you’re paying, with Xero Ignite plus the payroll add-on typically the cheapest option for very small teams.

Do You Have to Pay Extra For Xero Accounting?

No, with Xero, you don’t pay extra for accounting features. Xero is an accounting-first platform, so all of its tiers include core accounting features by default. Payroll is available as an add-on or included in certain plans, but accounting features are always part of the base subscription.

Even on Xero’s entry-level plan — Simple — you get access to essential accounting functionality, like invoice and quote creation, online invoice payments, bill and receipt capture, and real-time reports. Higher-tier plans build on this with more advanced tools, like multi-currency support, custom reporting, project tracking and enhanced automation for reconciliations.

How Much Are Xero’s Third-Party Integrations?

There’s no fixed price for Xero’s add-ons. Instead, the cost of third-party integrations varies by app category, features, usage levels and provider pricing models. Xero itself doesn’t charge for integrations — you pay the app vendor directly.

Ecommerce and sales syncing: Add ons focusing on online sales and sales data typically cost anywhere between £10 to £50 per month, depending on factors like order volume and number of sales channels. For example, an integration with Shopify costs £10 per month (on top of your Shopify subscription) and allows you to automatically sync sales into Xero.
CRM: CRM integrations usually cost £20 to £75 per month, depending on how much data you’re syncing and whether invoicing or deal automation is included. For example, a HubSpot to Xero connector typically costs around £20 to £50 per month and enables customer records, invoices and sales data to flow automatically between your CRM and Xero.
Time tracking: Time-tracking add-ons generally range from £5 to £15 per user, per month, with costs increasing as you add more staff. For example, Harvest starts from around £9 to £11 per user, per month, (GBP equivalent) and allows tracked hours to sync into Xero for invoicing and job costing.
Workflow automation: Workflow automation tools typically cost £10 to £30 per month, depending on the number of automated tasks or connections you need. For example, Zapier plans start at around £10 to £25 per month, enabling Xero to connect with hundreds of other apps and automate repetitive accounting workflows.

All in all, Xero’s third-party integrations have the potential to significantly expand the platform’s capabilities and help you sync data seamlessly across systems. However, with most applications charging monthly, it’s important to be mindful of how these costs can add up over time.

How Does Xero’s Price Compare With Competitors?

Xero sits within the mid-to-upper price range for small teams when compared with other entry-level payroll options. This is largely because Xero is an accounting-first software, and doesn’t offer payroll services on its lowest-priced plan — Xero Simple.

To make it easier to compare costs at a glance, we’ve created a graph visualising the estimated monthly price of Xero’s cheapest payroll plans, compared with competitors, for small businesses with two employees.

Estimated monthly payroll costs for small businesses with two employees, Xero's costs compared with competitors. Source: Expert Market

For a business with two employees, Xero Ignite costs £19 per month with the payroll add-on. This is noticeably more than budget-first providers like 1 2 Cloud Payroll, but still cheaper than bundled accounting-plus-payroll plans such as QuickBooks Simple Start with payroll.

This positions Xero as a step up from bare-bones payroll tools, without immediately pushing businesses into premium pricing territory.

Xero’s Grow plan, which includes payroll by default, is where costs begin to rise more sharply. At £38.50 per month for two employees, it lands at a similar level to specialist payroll platforms like Staffology’s entry plan, and is significantly more expensive than payroll-only providers aimed at micro-businesses.

However, with Xero only charging £1.50 per extra employee, compared with Staffology’s per employee cost of £2.15, it’s marginally cheaper for teams with larger headcounts.

It’s also worth noting that pricing transparency varies widely across the payroll market. Lots of leading payroll providers, like ADP, Rippling and Paychex, operate on a custom pricing model, making it hard to create direct comparisons between Xero and competitors.

SN: We are using Xero’s standard prices in the table. Its prices are currently lower for the first six months with Xero’s promotional deal.

How We Tested Payroll Software

We regularly research a wide range of market-leading payroll products and services to evaluate them in terms of functionality, usability, data security and customer support, so we can make the most useful recommendations for UK businesses.

Our rigorous research process means these products have been scored and rated in five main categories of investigation and 10 subcategories — in fact, we covered 56 areas of investigation in total. We then gave each category score a ‘relevance weighting’ to ensure the product's final score perfectly reflects the needs and requirements of Expert Market readers.

Our main testing categories for payroll products and services are:

Control: The level of customisation and flexibility provided by the payroll software in managing and processing payroll, such as the ability to define pay periods, set up tax withholding rules and manage employee data.
Data security: The measures and protocols implemented by the payroll software to ensure the confidentiality, integrity and availability of sensitive payroll information.
Expertise: The level of knowledge and guidance provided by the payroll software vendor or support team. This can include resources such as documentation, tutorials and training materials.
Scalability: The ability of the payroll software to accommodate the growth and changing needs of a business, including the capacity to handle an increasing number of employees and support multiple locations or entities.
Customer support: The various channels and methods available for users to seek assistance and support from the payroll software vendor, such as email or ticket-based support, phone support, or live chat.

Verdict: Is Xero Payroll Worth The Money?

Xero Payroll typically costs between £37 and £65 per month, depending on which plan you choose and the number of employees you’re paying, with additional staff charged at £1.50 per employee, per month.

For very small teams, Xero Ignite with the payroll add-on (£16 per month plus £1.50 per employee) is one of the most affordable ways to run payroll alongside accounting, while higher tiers like Grow, Comprehensive and Ultimate offer better value as headcount increases and accounting needs become more complex.

While Xero is an accounting platform first, it’ll likely be worth the money for businesses with straightforward payroll needs, especially for sole directors and growing small teams that want payroll and accounting in one system.

That said, we wouldn’t recommend Xero Payroll for larger or more complex organisations, as specialist payroll services, like Staffology by IRIS, ADP or Moorepay, offer deeper payroll functionality, scalability and support.

Meet our Expert author

Paul Thomas

Paul Thomas is an organisational development specialist with more than 20 years of senior HR and change management experience at global companies, including Morgan Stanley, HelloFresh and Babbel. He designs practical, behaviour-driven systems that improve workforce operations, leadership capability and digital tool adoption. His work aims to bridge strategy and execution, helping organisations create the conditions for smoother workflows, clearer communication and sustained performance.

Xero Payroll Pricing: How Much Does It Cost In 2026?