Your real choice isn’t “which software?”, it’s who carries the admin and compliance risk.
Below, we explain what payroll actually involves, compare in-house, software-only, and outsourced options, and model how effort and risk change at 5, 10, 25 and 50 staff on monthly vs weekly cycles, with exact HMRC/The Pensions Regulator deadlines cited inline.
What payroll actually involves (whoever does it)
When you “run payroll”, someone must:
- Calculate pay and issue payslips (gross-to-net, holiday pay, National Insurance, tax codes, student loans, attachment of earnings orders).
- Submit RTI — Real Time Information — to HMRC:
- Pay PAYE — Pay As You Earn (income tax and NIC due) — electronically by the 22nd of the following month (19th if by post). GOV.UK
- Pensions (Automatic Enrolment, AE) — assess/enrol eligible staff and fund at least 3% employer with a total minimum 8% including employee contributions. The Pensions Regulator
- Re-enrol eligible staff every 3 years and file a re-declaration within 5 months of the third anniversary of your duties start date. The Pensions Regulator
- Year-end tasks
Want the numbers behind the rates? See Payroll costs UK 2025/26 and NIC, PAYE & pension costs (2025/26), then use this article to decide how to operate.
The 3 operating options (side-by-side)
| What you get | In-house (DIY) | Software-only (you run it) | Outsourced (Heights) |
|---|---|---|---|
| Who does the work | Your admin/finance team | Your team + vendor tooling | Heights payroll specialists |
| RTI (FPS/EPS), PAYE, AE, year-end | All on you | All on you (guided by prompts) | We process and file; you approve |
| Time per cycle | Highest | Medium | Lowest |
| Cover for absence | Key-person risk | Slightly better (checklists) | Built-in continuity |
| Complexity handling (weekly cycles, starters/leavers, SMP/SSP, P11D, AEOs) | Can overwhelm | Still heavy | Routine for us |
| Controls & approvals | You design | You design, software supports | You approve outputs before payday |
| Cashflow prompts (PAYE 22nd, pensions) | You track | You track (reminders help) | We schedule and nudge |
| Direct cash cost | Lowest £, highest time | Licence + your time | Service fee, minimal internal time |
| Risk exposure | Late/incorrect filings if busy | Same (tooling ≠ filing) | Reduced via specialists & QA |
| Scales to weekly cycles | Painful | Painful | Designed for it |
Not sure what’s included when outsourcing? See Payroll services UK what’s included.
Worked scenarios (service-sector SME examples)
Assumptions: standard employees, no benefits-in-kind, AE at 3% employer / 8% total, PAYE due electronically on the 22nd; time estimates reflect hands-on admin to collect changes, run, check, submit, post journals, upload pension files, and monitor payments. The Pensions Regulator
A) 5 staff — monthly vs weekly
- Monthly: ~1.5–2.0 hours per run; one FPS on/before payday, one PAYE payment by 22nd, one pension upload. Typical failure points: late FPS, missing an EPS for statutory pay. GOV.UK
- Weekly: ~0.75–1.0 hour × 52 (≈39–52 hrs/year); 52 FPS deadlines. Consider outsourcing if holidays/sickness risk missed on-or-before filings. GOV.UK
B) 10 staff — monthly vs weekly
- Monthly: ~2.5–3.5 hours; more starters/leavers, AEOs, occasional statutory pay recoveries (EPS by 19th). GOV.UK
- Weekly: ~1.0–1.25 hour × 52 (≈52–65 hrs/year); risk multiplies across 52 FPS and 12 PAYE cycles. GOV.UK
C) 25 staff — monthly vs weekly
- Monthly: ~4–6 hours; QA and pension exceptions grow; journals take longer.
- Weekly: ~1.5–2.0 hours × 52 (≈78–104 hrs/year); materially higher exposure to late/incorrect filings and rework.
D) 50 staff — monthly vs weekly
- Monthly: ~7–10 hours; dedicated cover becomes essential.
- Weekly: ~2.0–3.0 hours × 52 (≈104–156 hrs/year); DIY turns into a rota management job, outsourcing typically wins on opportunity cost alone.
“Costs by size” (quick view)
Use this to sense-check where DIY time starts to overtake an outsourced fee. For fee bands, see Payroll costs UK 2025/26.
| Headcount | Monthly cycle – DIY time (hrs/month) | Weekly cycle – DIY time (hrs/month) | What this usually means |
|---|---|---|---|
| 5 | 1.5–2.0 | 3–4.5 | Monthly: DIY fine. Weekly: admin burden noticeable on holidays/peaks. |
| 10 | 2.5–3.5 | 4–5.5 | Weekly risk compounds; plan trained cover or outsource. |
| 25 | 4–6 | 6.5–8.5 | Weekly becomes a dedicated role; outsourcing often cheaper than lost time. |
| 50 | 7–10 | 8.5–13 | Even monthly needs structured controls; outsourcing usually more resilient. |
Running seasonal or multi-site rotas? Pair our 52-week forecast template with Seasonal businesses & cashflow forecasting to smooth PAYE and pension cash outflows through spikes.
When DIY (or software-only) makes sense, and when it doesn’t
Choose DIY / software-only if you:
- Run single monthly cycles, predictable hours, low churn.
- Have no/few benefits-in-kind (so minimal P11D work each July). GOV.UK
- Are comfortable owning RTI calendars (FPS on/before payday, EPS by 19th) and the PAYE by 22nd payment routine. GOV.UK
- Have trained cover for holidays and sickness.
Choose Outsourced if you:
- Run weekly or mixed cycles, variable hours, frequent starters/leavers.
- Need help with statutory pay recoveries (EPS), P11D/P11D(b), or Class 1A NIC each July. GOV.UK
- Want a named specialist, formal approvals, and SLA-level timeliness.
Your must-hit compliance dates (at a glance)
- FPS (Full Payment Submission): on or before each payday. GOV.UK
- EPS (Employer Payment Summary): by the 19th of the following tax month when reclaiming statutory pay or reporting no payment due. GOV.UK
- PAYE/NIC payment: by the 22nd of the following month electronically (19th if by post). GOV.UK
- P60 to employees: by 31 May. GOV.UK
- P11D & P11D(b): file by 6 July; Class 1A NIC by 22 July (19th by post). GOV.UK
- AE contributions minimums: 3% employer, 8% total (including staff). The Pensions Regulator
- AE re-enrolment & re-declaration: every 3 years, re-declaration within 5 months. The Pensions Regulator
Decision framework (use this with your ops lead)
- Complexity now: monthly only and simple → DIY works. Weekly/mixed shifts → outsource.
- 12-month growth: if headcount rising or moving to weekly rotas, build for future scale now.
- Cost of an error vs service fee: one late FPS/EPS, missed PAYE 22nd, or a messy P11D cycle can exceed a year of outsourced fees.
Related reading
- Payroll costs UK 2025/26
- Payroll services UK — what’s included
- NIC, PAYE & pension costs (2025/26)
- Seasonal businesses & cashflow forecasting
- 52-week forecast template
Call to action
Book a 20-minute planning call, we’ll map your cycles, deadlines, and risk points, then give you a clear DIY vs outsourced recommendation for the next 12 months.
FAQ
Q1. We paid staff early (e.g., before a bank holiday). What do we file?
File the FPS for the contractual payday and do it on or before that date; don’t move the payday in RTI just because you paid early. GOV.UK
Q2. No one was paid this month — do we still file?
Yes. Send an EPS telling HMRC there was no payment due, by the 19th of the following tax month. GOV.UK
Q3. When is PAYE due?
By the 22nd of the following month electronically (19th if paying by post). GOV.UK
Q4. What are the minimum workplace pension contributions?
Total minimum 8%, with at least 3% employer. The Pensions Regulator
Q5. When do we re-enrol staff who opted out?
Every 3 years, and file your re-declaration of compliance within 5 months of the third anniversary. The Pensions Regulator
Q6. What must we give staff at year-end?
A P60 by 31 May to anyone employed on 5 April. GOV.UK
Q7. Do we need to file P11Ds?
If you provide taxable benefits-in-kind, file P11D and P11D(b) by 6 July and pay Class 1A NIC by 22 July (19th by post). GOV.UK
Q8. Can we switch to outsourced payroll mid-year?
Yes, we migrate YTD figures, RTI references, pension settings and journals; you keep meeting the same FPS/EPS and PAYE dates. (Deadlines as above.) GOV.UK