If you’re seeing “from £25/month” for payroll, you’re only getting half the story. By the time you add headcount, pensions, starters/leavers, and year-end filings, the real monthly figure is usually very different, and that’s before missed RTI or P11D deadlines start racking up penalties. This guide breaks down what UK SMEs actually pay in 2025/26, what’s included (and what isn’t), and how to choose a provider with no nasty surprises. For a deeper dive on totals across headcounts, see payroll costs UK, what SMEs actually pay (2025/26) once you’ve read this overview.
Who this is for: UK employers with ~5–50 staff (monthly or weekly payroll) who want a clear, apples-to-apples picture of outsourced payroll costs and compliance.
What does a proper outsourced payroll service include?
A credible provider should handle:
- Payroll processing (monthly or weekly) and RTI submissions (FPS/EPS) on or before payday, exceptions are limited and specific.
- Starters & leavers (P45), tax code notices, and standard pay elements.
- Pension auto-enrolment duties: assessing workers, enrolling or postponing where appropriate, ongoing monitoring, and contribution files to your scheme (Nest, People’s, Aviva, etc.).
- PAYE/NIC payment guidance so you hit the 22nd (electronic) deadline and avoid interest/penalties.
- Year-end: P60s by 31 May; P11D/P11D(b) by 6 July; Class 1A NIC by 22 July if due.
- Basic compliance help (SSP/SMP frameworks), standard reports, and secure portals.
Want a side-by-side of “what’s typically included vs add-ons”? We’ve unpacked this in payroll services UK — what’s included (and what’s not) so you can benchmark quotes consistently.
Typical fee structure (how providers price)
Most UK providers use a blend of:
- Base fee per pay run (now commonly £40–£80 per run for SMEs)
- Per-employee fee (often £5–£9 per active employee per run)
- Add-ons for pensions (assessments + upload files), weekly payroll, multiple pay groups, CIS, P11D prep, HR support, and bespoke reports
The headline “from” price usually reflects one pay frequency, a small headcount, and minimal extras. Once you add pension handling and real headcount, the “true” number emerges. For a line-by-line total that also covers employer NIC and pension contributions, jump to NIC, PAYE & pension costs (2025/26).
Worked scenarios (2025/26)
Assumptions: single monthly pay group; standard RTI; pension assessment + upload included; value-anchored but realistic market bands (illustrative).
Scenario A — 5 employees (monthly)
- Base fee: £55
- Per-employee: 5 × £6 = £30
- Auto-enrolment handling: £25
Estimated monthly cost: £110
Effective per-employee: ~£22/month
Scenario B — 10 employees (monthly)
- Base fee: £65
- Per-employee: 10 × £6 = £60
- Auto-enrolment handling: £30
Estimated monthly cost: £155
Effective per-employee: ~£15.50/month
Scenario C — 25 employees (monthly)
- Base fee: £95
- Per-employee: 25 × £5.50 = £137.50
- Auto-enrolment handling: £45
Estimated monthly cost: ~£280
Effective per-employee: ~£11.20/month
Scenario D — 25 employees (weekly)
Weekly payroll means 52 runs (not 12). Providers often lower the base per run, but frequency multiplies costs.
- Base fee per run: £32 (×52) → £1,664/year
- Per-employee per run: 25 × £1.60 = £40 (×52) → £2,080/year
- Pension handling (weekly files/monitoring): ~£90/month → £1,080/year
Estimated annual cost: ~£4,824 (≈ £402/month averaged)
Tip: If most staff are monthly but a few need weekly, ask about mixed frequencies (a small weekly group plus the main monthly run) to keep costs sensible. If weekly cycles are a cash drain, our seasonal businesses & cashflow forecasting guide shows how to plan payroll peaks with a 52-week forecast.
Quick view: Costs by size (monthly payroll)
| Employees | Typical monthly | Typical per-employee |
|---|---|---|
| 5 | ~£110–£130 | ~£22–£26 |
| 10 | ~£150–£170 | ~£15–£17 |
| 25 | ~£270–£300 | ~£10.80–£12 |
| 50 | ~£520–£620 | ~£10–£12.40 |
Pricing varies by complexity, software, pensions, and support level. Use this table as a sanity-check against any quote you receive. If a quote looks far lower, test it against our hidden payroll fees UK checklist so you don’t get stung later.
What usually isn’t included (or is charged extra)
- P11D / P11D(b) preparation for benefits in kind (annual).
- Advanced pension tasks (re-declarations, scheme changes, salary sacrifice setup).
- Multiple pay frequencies (e.g., weekly + monthly) and off-cycle runs (bonuses/backs).
- Back-dated corrections and amended RTI submissions.
- HR advisory beyond payroll mechanics.
- CIS processing for construction (a separate workflow).
We catalogue these line-by-line (with typical market rates) in payroll services UK – what’s included (and what’s not) so you can compare providers like-for-like.
Compliance costs you avoid by outsourcing (time, risk, and penalties)
- RTI timing: You must send an FPS on or before payday (EPS where applicable). Late filings have limited easements.
- PAYE/NIC cashflow: PAYE due by the 22nd (electronic) monthly/quarterly; late payment can trigger interest/penalties.
- Year-end: P60s by 31 May; P11D/P11D(b) by 6 July; Class 1A NIC by 22 July (electronic).
- Auto-enrolment: Ongoing worker assessments and pension file uploads are statutory, not optional.
- Employment Allowance: Check eligibility so your provider can apply it correctly and reduce secondary Class 1 NIC where applicable. (Ask your provider to confirm the current year’s limit and rules.)
Considering running payroll yourself? Our DIY vs outsourced payroll (UK 2025/26) comparison weighs software licences, time, error risk, and common penalty traps, helpful if you’re on the fence.
How to get a like-for-like quote (no surprises)
Use this 8-point checklist when you ask for proposals:
- Headcount and frequency — monthly vs weekly; number of pay groups
- Starters/leavers volume and mid-month changes
- Pensions — scheme, assessment method, postponement, salary sacrifice
- Benefits/allowances — recurring items (cars, healthcare, bonuses)
- Reports & journals — format for Xero/QuickBooks/Sage, costing splits
- Off-cycle runs — how are ad-hoc payments priced?
- Year-end — P60s included? P11D/P11D(b) priced separately?
- Service & SLA — response times, named contact, handback controls
If you want a ready-made template for this, our payroll costs UK – what SMEs actually pay (2025/26) post includes a downloadable brief you can send to providers.
Frequently asked questions
What information do we need to provide each month?
Changes to starters/leavers, pay adjustments, overtime/bonuses, approved leave, and any benefit changes. Your provider will translate that into RTI (FPS/EPS) on or before payday.
Do payroll providers pay HMRC for us?
Most providers prepare figures and tell you how much and when to pay (by the 22nd if electronic). Some offer bureau payment services for an extra fee — check your contract.
Are P11Ds included in the monthly fee?
Often not. Many providers bill P11D/P11D(b) as a year-end project, priced per employee with benefits. Confirm up-front.
Will they handle pension uploads?
Good providers assess workers, create contribution files, and upload to your scheme portal each period; confirm whether this is included or an add-on.
What are the key year-end dates?
P60s by 31 May; P11D/P11D(b) by 6 July; Class 1A NIC by 22 July (electronic).
Related guides (useful next reads)
- Payroll costs UK — what SMEs actually pay (2025/26)
- Payroll services UK — what’s included (and what’s not)
- NIC, PAYE & pension costs (2025/26)
- DIY vs outsourced payroll (UK 2025/26)
- Seasonal businesses & cashflow forecasting (with the 52-week forecast lead magnet)
Ready to benchmark your payroll?
If you want a clear, like-for-like quote for your team size and pay frequency, including pensions and year-end, we’ll map it out and show you the true-in-practice monthly number.
👉 Book a 20-minute planning call and we’ll price it transparently, line by line.