Payroll is something most employers expect to run quietly in the background.
But when costs increase, or issues start to appear, a common question comes up:
How much should payroll cost in the UK?
The answer is not always straightforward. Payroll pricing can vary widely depending on how it is delivered, what is included, and how complex your payroll is.
This guide is designed to give you a clear, practical sense-check, not a sales pitch.
How much should payroll cost in the UK?
There is no single “right” price for payroll. What matters most is whether the cost reflects what you actually need and what is included in the service.
Imagine, do you need a Ferrari to drive to your local supermarket to get a bottle of milk and a loaf of bread?
In most cases, payroll pricing is affected by three main factors.
1. What is included in the price
Some providers advertise a low starting price, but charge extra for services employers often assume are included.
These can include:
- Pension processing
- HMRC submissions
- Year-end documents such as P60s and P45s
- Employee access to payslips
It's important to note, that even when payroll is outsourced, employers remain legally responsible for running payroll correctly. HMRC sets out these responsibilities clearly for employers who run payroll themselves or use a third party:
https://www.gov.uk/running-payroll
Other providers include these services within a single, transparent fee. This is why two quotes that look similar at first can end up costing very different amounts.
2. How the payroll is processed
Payroll costs are also influenced by how the work is done.
For example:
- Fully outsourced versus self-service
- Manual processes versus automation
- A named contact versus a general helpdesk
- Payroll processed in the UK or overseas
The right systems and automation can keep costs down while maintaining accuracy and compliance. The key is whether the delivery model suits how your business operates.
3. The size and complexity of your payroll
A simple, monthly payroll with few changes will usually cost less than a payroll with:
- Weekly pay
- Regular starters and leavers
- Workplace pension schemes
- Adjustments such as salary sacrifice
Fair pricing should reflect complexity, not just the number of employees.
Typical payroll costs in the UK
As a general guide, many UK employers will see payroll costs fall into these ranges:
- Basic payroll: from around £2.50 to £4 per payslip
- More complex payrolls: £4 to £7 per payslip
- Highly bespoke payrolls: priced individually
The headline price matters less than understanding what is included and how the service is delivered.
A real-world example (anonymised)
We recently worked with a lifting company based in Cradley Heath employing 92 staff, with a requirement for a 24-hour payroll turnaround.
They had moved from a much larger provider where fees were significantly higher, 4 times higher to be honest, additional charges were applied for errors regardless of fault, and payroll processing had been outsourced overseas. This made it difficult to get clear answers when issues arose in a timely maner.
Rather than selling a package, we discussed what the business actually needed. Although they initially selected a higher-tier option, it became clear this would be more than required. We agreed they would start on our standard package, which covered everything they needed and included a free audit of their existing payroll.
Two months on, the business remains on the standard package. At their first quarterly review, they confirmed payroll costs had reduced considerably and they felt more confident working with a smaller bureau that focuses on understanding client needs rather than selling packages.
Payroll and pensions: a common area of confusion
Workplace pensions are a good example of where costs and responsibility can become unclear.
Employers have ongoing duties around enrolment, contributions, and compliance. These responsibilities are overseen by The Pensions Regulator:
https://www.thepensionsregulator.gov.uk/en/employers
Some payroll providers include pension processing as standard. Others charge separately or require additional setup. Understanding this upfront helps avoid surprises later.
The real cost of “cheap” payroll
Low-cost payroll can work well if it genuinely meets your needs.
Problems tend to arise when:
- Support is limited or slow
- Errors take time to resolve
- Pension or HMRC issues are missed
- Employers spend more internal time managing payroll
In those cases, the true cost is not just the invoice. It is the time, stress, and risk involved.
Final thoughts
Payroll does not need to be expensive.
But it does need to be clear, compliant, and dependable.
If payroll is already sorted your side, no action needed.
If you are reviewing things or simply sense-checking what you are paying for, clarity is the best place to start and we can help with this.
Why not book a demo or request a quote to see if to see if you're getting the service you think you're paying for.
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Have you visited our resource page? Full of lots of useful HR templates you can download for free. HR & Payroll Resources
