An Overview of Xero Payroll Pricing

Payroll Services

Xero Payroll is a cloud-based payroll solution that integrates with Xero’s popular accounting software. It starts at just £5 per month for up to five employees, plus £1 per month for each additional employee, making it an affordable option. However, the total payroll cost and fees will depend on your specific requirements and the number of employees you have.

Thanks to its comprehensive features and ease of use, Xero Payroll offers excellent value for small to medium-sized businesses, particularly if your company already uses Xero for accounting. However, larger enterprises with more complex needs may find alternative solutions more suitable.

How Much Does Xero Payroll Cost?

Xero Payroll is an add-on to Xero’s accounting software. The Xero accounting base plans, Starter, Standard, Premium, and Ultimate, cost £15, £30, £42, and £55 per month, respectively, with a 90% discount for the first six months.

When you sign up for the Starter, Standard, or Premium plans, you get two months of free payroll. After the initial free period, Xero Payroll pricing is £5 per month for up to five employees, plus £1 per month for each additional person.

The Ultimate plan includes payroll for 10 people, then it’s £1 per month for each additional employee.

What’s Included in Xero Payroll?

Here are the main features included in Xero Payroll

HMRC Compliance

Xero Payroll is HMRC recognised for Real Time Information (RTI) online filing. This means it automatically calculates and submits your payroll information to HMRC, ensuring you stay compliant with UK regulations. It handles tax, National Insurance contributions (NIC), student loan deductions, and pension calculations, so you don’t have to worry about manual calculations or errors.

Statutory Pay Calculations

Xero Payroll automatically calculates statutory pay, including Statutory Paternity Pay (SPP), Statutory Maternity Pay (SMP), Statutory Adoption Pay (SAP), and Statutory Shared Parental Pay (ShPP). It also handles Statutory Sick Pay (SSP) calculations and reporting. This ensures your employees receive the correct pay and deductions and helps you avoid penalties for non-compliance.

Flexible Pay Schedules

Whether you pay your employees weekly, fortnightly, or monthly, Xero Payroll can accommodate your pay schedule. You can set up multiple pay schedules for different groups of employees, such as salaried staff and hourly workers. This flexibility allows you to tailor your payroll to your business needs and ensures everyone gets paid on time.

For help on how to choose the right payroll schedule, go to our guide.

Employee Self-Service

Xero Payroll includes an employee self-service portal called Xero Me. Employees can access their payslips, submit timesheets, request leave, and update their personal information online or through the mobile app. This reduces the administrative burden on your HR and payroll teams and empowers employees to manage their own information.

Payroll Reporting

Xero Payroll generates all the necessary payroll reports, including P60 and P45 forms. You can also create custom reports to analyse your payroll data and gain insights into your labour costs. Reports can be exported to PDF or Excel for further analysis or record-keeping.

Pensions Auto-Enrolment

Xero Payroll supports pensions auto-enrolment, making it easy to comply with UK pension regulations. It assesses your employees’ eligibility, enrols them in a pension scheme, and calculates the necessary contributions. You can also manage opt-ins, opt-outs, and contribution changes directly in Xero Payroll.

Customisable Payslips

You can customise your payslip templates in Xero Payroll to reflect your brand and include the information your employees need. Payslips can be emailed directly to employees or accessed through the Xero Me portal. This eliminates the need for printing and distributing physical payslips, saving you time and money.

Integration with Xero Accounting

As an add-on to Xero’s accounting software, Xero Payroll seamlessly integrates with your financial data. Payroll information flows directly into your general ledger, eliminating the need for manual data entry and reducing the risk of errors. This integration provides a complete picture of your financial position and streamlines your accounting processes.

Is Xero Payroll Worth It?

One of Xero Payroll’s main advantages is its affordability. At just £5 per month for up to five employees, plus £1 per additional person, it’s one of the most cost-effective cloud-based payroll solutions on the market. This makes it an attractive choice for small businesses and startups looking to streamline their payroll processes without breaking the bank.

Xero Payroll’s features are also comprehensive enough to meet the needs of most small to medium-sized businesses. It handles all the essential aspects of payroll, from HMRC compliance and statutory pay calculations to customizable payslips and employee self-service. You can set up multiple pay schedules and accommodate different types of workers (e.g., salaried, hourly, and subcontractors).

Xero Payroll Alternatives

While Xero Payroll is an excellent choice for many businesses, it’s not the only option. Here are some alternatives:

  • Iris Staffology: Iris Staffology is a comprehensive and user-friendly cloud-based payroll solution. Like Xero Payroll, it offers features like automatic tax calculations, customizable payslips, and employee self-service.
  • ADP: ADP is a well-established global payroll provider that offers a range of solutions for businesses of all sizes. Compared to Xero Payroll, ADP provides more advanced features like HR integration, workforce analytics, and global payroll support. However, ADP’s pricing is generally higher and less transparent than Xero Payroll’s.
  • MHR: MHR’s iTrent payroll software is known for its powerful reporting capabilities. It allows you to generate custom reports and gain deep insights into your payroll data. It also offers features like employee self-service and automatic tax calculations. Unlike Xero Payroll, MHR doesn’t offer an iOS or Android app for employee to use.
  • Frontier: Frontier Software’s payroll solution is well suited for businesses with international payroll needs, as it supports multiple currencies and country-specific tax regulations.
  • Advanced: Advanced’s payroll software offers comprehensive features and strong customer support, including live training sessions and a dedicated helpdesk. Like Xero Payroll, it handles automatic tax calculations and pension auto-enrollment. However, Advanced doesn’t have the convenient mobile apps for employees that Xero Payroll does.
  • Moorepay: If you want to completely outsource your payroll, Moorepay’s managed payroll service is a strong contender. The company handles everything from processing pay to dealing with HMRC, which can save you significant time and stress. This level of service does come at a higher cost than DIY solutions like Xero Payroll.

If you’re already using Xero for accounting and have straightforward payroll requirements, Xero Payroll is hard to beat in terms of value and ease of use. However, if you have more complex needs, prefer a standalone solution, or want to outsource your payroll completely, one of these top cloud-based payroll software solutions may be a better fit.

Verdict

Xero Payroll is a feature-rich, affordable, and user-friendly cloud-based payroll solution that offers excellent value for many UK businesses. Its seamless integration with Xero accounting, comprehensive features, and ease of use make it a top choice for small to medium-sized enterprises.

However, it may not be the best fit for larger businesses with more complex needs or those not already using Xero. In such cases, alternatives like Iris Staffology, ADP, or fully managed services like Moorepay may be more suitable.

Written by:
Richard has more than 20 years of experience in business operations, computer science and full-stack development roles. A graduate in Computer Science and former IT support manager at Samsung, Richard has taught coding courses and developed software for both private businesses and state organisations. A prolific author in B2B and B2C tech, Richard’s work has been published on sites such as TechRadar Pro, ITProPortal and Tom’s Guide.