“How much does payroll really cost — and why does the ‘from £25’ headline jump?”
Below we unpack what drives cost, the price models you’ll be quoted, what’s usually included vs extra, and three worked examples (10 / 25 / 50 staff) so you can benchmark before you buy. Important: you remain legally responsible for PAYE/NIC and payroll obligations even if you outsource. GOV.UK
Key Facts (deadlines you can’t skip)
- RTI submissions: send FPS on or before payday; send EPS by the 19th of the following tax month to apply reductions. GOV.UK
- PAYE/NIC payment to HMRC: by the 22nd each month if paying electronically (19th if by post). GOV.UK
- P60s: give to employees by 31 May. GOV.UK
- P11D/P11D(b) & Class 1A NIC: 6 July (returns); 22 July electronic for Class 1A. GOV.UK
- Auto-enrolment re-declaration: within 5 months of the 3-year anniversary of your AE duties start date. The Pensions Regulator
What Drives Payroll Cost? (The 7 variables)
- Headcount & pay frequency — more employees and more pay runs (weekly vs monthly) = more work and more RTI filings (FPS on/before payday). GOV.UK
- Complexity — overtime, commissions/bonuses, irregular hours, multiple PAYE schemes, benefits in kind.
- Auto-enrolment duties — set-up, assess/enrol each pay run, handle opt-ins/outs or postponement, and re-declaration. The Pensions Regulator
- Reporting obligations (RTI: FPS/EPS) — FPS each pay run; EPS by the 19th where applicable. GOV.UK
- Year-end — P60s by 31 May; P11D/P11D(b) where benefits apply. GOV.UK
- Operating model — software-only vs bureau vs fully-managed (where each cost sits: licences vs service).
- NIC thresholds & letters (2025/26) — employer cost-to-employ depends on current rates and thresholds; link to HMRC for exact figures. GOV.UK
Typical UK Payroll Price Models (What you’ll be quoted)
- Per-employee per-month (PEPM): base platform/processing fee plus add-ons (starters/leavers, AE events, custom reports).
- Per-pay-run fees: weekly runs multiply cost vs monthly, frequency is a major driver.
- Fixed bundles: a set number of employees and reports included; extras billed ad-hoc.
Pro tip: Ask providers to show a worked total for your headcount and pay frequency, not just a headline “from £X”.
Related: Hidden payroll fees UK
What’s Included vs What’s Extra (and why it matters)
Usually included: payslips, core calculations, RTI FPS submissions, and standard HMRC deductions. GOV.UK
Often extra:
- Setup/onboarding (collecting starter info, opening balances).
- Starters/leavers admin (P45/new starter data) and extra RTI events. GOV.UK
- Auto-enrolment actions (postponement, opt-ins/outs) and re-declaration. The Pensions Regulator
- Year-end packs (P60s) and P11D/P11D(b) for benefits. GOV.UK
- Custom/lender/HR reports (bank, mortgage, funding).
See also: Hidden payroll fees UK
Compliance & Deadlines SMEs can’t skip (budget for them)
- RTI timeline: FPS on/before payday; EPS by the 19th (to apply reductions). GOV.UK
- PAYE/NIC payment: by the 22nd electronic (19th post). GOV.UK
- P60: 31 May. GOV.UK
- P11D/P11D(b) & Class 1A NIC: 6 July / 22 July. GOV.UK
- AE re-declaration: due within 5 months of your 3-year anniversary. The Pensions Regulator
Employer NIC & Thresholds 2025/26 (why rates change your budget)
We won’t reproduce HMRC’s tables here; for accuracy, check Rates and thresholds for employers 2025 to 2026 on your site (with HMRC sources embedded there). Your employer NIC exposure and letter categories affect total cost-to-employ and therefore the value of outsourcing vs in-house. GOV.UK
In-house vs Software vs Outsourced (Which is cheaper overall?)
| Option | Direct costs | Your time | Compliance risk | Scalability |
|---|---|---|---|---|
| In-house | Salary/time, training, software | Highest | On you | Limited by team |
| Software-only | Licence + your time | High | On you (RTI/AE) | OK if simple |
| Outsourced | PEPM + scoped add-ons | Lower | Shared process — but you’re still responsible | High |
Employer responsibility does not disappear when you outsource. GOV.UK
Related: DIY vs outsourced payroll & Payroll services UK – what’s included
Costs by size (quick scan)
Directional only, based on the same assumptions used in the worked examples: base/monthly run £45 + £3 per employee; base/weekly run £30 + £3 per employee; starters/leavers £20 each; AE admin £25/month; P60s £2/employee; no P11Ds included.
| Headcount & frequency | Base runs / year | Starters / leavers (assumed) | AE admin (annual) | Year-end P60s | Estimated total / year | Payslips / year | ≈ £ / payslip |
|---|---|---|---|---|---|---|---|
| 5 staff, monthly | £720 | £40 (2) | £300 | £10 | £1,070 | 60 | £17.83 |
| 10 staff, monthly | £900 | £80 (4) | £300 | £20 | £1,300 | 120 | £10.83 |
| 25 staff, mixed (15 monthly, 10 weekly) | £4,200 | £240 (12) | £300 | £50 | £4,790 | 700 | £6.84 |
| 50 staff, weekly | £9,360 | £600 (30) | £300 | £100 | £10,360 | 2,600 | £3.98 |
Why the spread? Weekly frequency multiplies runs (and RTI filings); bigger teams spread fixed costs over more payslips. Complexity (overtime, benefits, multiple schemes) will push totals up.
Worked Examples (benchmark before you buy)
These are realistic, directional illustrations (not vendor quotes). Adjust up/down for your sector, benefits complexity and pay frequency. All examples assume standard PAYE, one pension scheme, and electronic payments on time.
RTI rules apply whoever runs payroll: FPS on/before payday; EPS by the 19th; PAYE due by the 22nd. GOV.UK
Example A – 10 staff, monthly, “standard” complexity
- Run cost (monthly): Base £45 + (10 × £3) = £75 / month → £900 / year
- Likely extras (annualised): Starters/leavers (4) £80; AE £300; P60s £20
- Estimated total (year): £1,300 → ~£10.83 per payslip (120 payslips)
If benefits in kind apply, add P11Ds and note the 6 July/22 July deadlines. GOV.UK
Example B – 25 staff, mixed: 15 monthly + 10 weekly
- Monthly run: Base £45 + (15 × £3) = £90 / month → £1,080 / year
- Weekly run: Base £30 + (10 × £3) = £60 / week → £3,120 / year
- Run subtotal: £4,200 / year
- Extras: Starters/leavers (12) £240; AE £300; P60s £50
- Estimated total (year): £4,790 → ~£6.84 per payslip (700 payslips)
Frequency is the big lever; weekly runs add cost and more RTI filings. GOV.UK
Example C – 50 staff, weekly (all hourly with overtime)
- Weekly run: Base £30 + (50 × £3) = £180 / week → £9,360 / year
- Extras: Starters/leavers (30) £600; AE £300; P60s £100
- Estimated total (year): £10,360 → ~£3.98 per payslip (2,600 payslips)
Expect more queries and RTI traffic; keep EPS timing and monthly PAYE payments tight. GOV.UK
How to Get a Transparent Quote (copy-paste checklist)
Ask each provider to price line-by-line:
- Setup/onboarding and data migration
- Per-run base and per-employee fees (monthly and weekly)
- Starters/leavers (P45/new starter) volumes and price
- Auto-enrolment actions and re-declaration
- Year-end (P60s) and P11D/P11D(b) if applicable
- Number of included reports (and what “custom” costs)
- Out-of-scope hourly rate; notice period; exit file format
Include the HMRC/TPR terms so sales teams know exactly which tasks you mean: FPS/EPS, P60, P11D/P11D(b), AE re-declaration. The Pensions Regulator
FAQs
What payroll tasks are legally required each pay period?
RTI FPS on/before payday; EPS by the 19th if applicable (e.g., to apply reductions). GOV.UK
Do I still carry legal responsibility if I outsource payroll?
Yes. You remain accountable for operating payroll rules correctly and paying HMRC on time. GOV.UK
Are P60s included in my monthly fee?
They must be issued by 31 May; whether they’re included or billed separately is scope-dependent. GOV.UK
What about benefits in kind?
If you provide benefits, you’ll need P11D/P11D(b) and pay Class 1A NIC by 22 July (electronic). GOV.UK
Where do I find this year’s NIC thresholds?
See HMRC’s current rates in your companion article NIC, PAYE & pension costs (2025/26) (sourced from HMRC tables). GOV.UK+
Next Steps (trust-first CTA)
Want exact numbers for your headcount and frequency? We’ll price it transparently, line-by-line, with no surprises.
- Hidden payroll fees UK
- Payroll services UK – what’s included
- DIY vs outsourced payroll
- NIC, PAYE & pension costs (2025/26)
- Seasonal businesses & cashflow forecasting
- 52-week forecast template
CTA: Book a 20-minute planning call.