Payroll companies list uk

Finding the right payroll company in the UK is crucial for any business, whether you’re a burgeoning startup or a well-established enterprise. A robust payroll solution ensures your employees are paid accurately and on time, while keeping you compliant with HMRC regulations. In the UK, some of the top-tier payroll providers include ADP, IRIS, Sage, Moorepay, and activpayroll, each offering a spectrum of services tailored to different business sizes and complexities. Selecting the best fit involves evaluating factors like scalability, integration capabilities, customer support, and, of course, cost-effectiveness.

The stakes are high: errors can lead to hefty fines from HMRC, disgruntled employees, and a significant drain on your valuable time and resources.

This is where a dedicated payroll company becomes not just a convenience, but a strategic necessity.

They bring expertise, technology, and compliance safeguards, allowing you to refocus on what truly matters: growing your business.

Think of it like this – you wouldn’t try to build a custom-coded app from scratch if there’s a proven, off-the-shelf solution that perfectly fits your needs, right? Payroll is similar.

Outsourcing it to specialists frees up your mental bandwidth for strategic initiatives.

Understanding the Landscape of UK Payroll Companies

The UK payroll market is diverse, ranging from global giants to niche, boutique firms.

Each offers a unique blend of services, technology, and support. It’s not just about processing numbers.

It’s about compliance, data security, and often, providing insights that help you manage your workforce more effectively.

According to a 2023 report by the CIPP Chartered Institute of Payroll Professionals, over 60% of UK businesses now outsource at least part of their payroll, a clear indicator of the perceived value and complexity involved.

This trend is driven by the increasing burden of regulatory compliance, which saw over 1,500 legislative changes impacting payroll in the last five years alone. Pay stub what is

Key Players in the UK Payroll Market

When you start digging into the UK payroll scene, a few names consistently rise to the top.

These companies have established reputations, robust systems, and a broad client base, from SMEs to multinational corporations.

• ADP Automatic Data Processing: A global powerhouse with a significant UK presence. ADP offers a full suite of HR and payroll services, from basic payroll processing to comprehensive HR management systems. They’re known for their sophisticated technology and ability to handle complex, multi-national payrolls. In Q4 2023, ADP reported serving over 990,000 clients globally, with a substantial portion in Europe.
• IRIS Software Group: One of the UK’s largest privately held software companies, IRIS is a dominant force in accounting, HR, and payroll. They cater extensively to SMEs and accountants, offering integrated solutions. Their market share in the UK accountancy sector is particularly strong, with an estimated 50% of UK accountancy firms using IRIS software.
• Sage: Another British multinational, Sage is a major provider of accounting, payroll, and enterprise resource planning software. Their payroll solutions are popular among small to medium-sized businesses for their user-friendliness and integration with other Sage products. Sage serves over 6.1 million customers worldwide, with the UK being a core market.
• Moorepay: Specializing in HR and payroll services, Moorepay prides itself on its personal approach and dedicated client support. They offer fully managed payroll services, HR advisory, and integrated HR software. They process payroll for over 10,000 UK businesses, demonstrating their significant footprint.
• activpayroll: A global payroll and HR solutions provider, activpayroll focuses on delivering tailored services, especially for businesses with international operations. They are renowned for their expertise in global payroll compliance and reporting.

Factors to Consider When Choosing a Payroll Company

Selecting the right payroll partner isn’t a one-size-fits-all decision.

You need to align their offerings with your specific business needs, current infrastructure, and future growth plans.

Think of it like picking the right tool for a specific job. Workful skip payroll

A hammer isn’t much use if you need to turn a screw.

• Business Size and Complexity: Are you a small startup with 5 employees or a multi-site company with 500? Some providers excel with SMEs, while others are better equipped for enterprise-level demands.
• Service Level Required: Do you need a fully managed service where they handle everything, or just software for you to run payroll internally?
• Integration Capabilities: Can the payroll system seamlessly integrate with your existing accounting software e.g., Xero, QuickBooks or HR systems? This is crucial for data consistency and efficiency.
• Customer Support: What kind of support do they offer? Phone, email, dedicated account manager? How quickly do they respond to queries? A 2023 survey by PwC found that 85% of businesses rate responsive customer support as a critical factor in vendor selection.
• Compliance Expertise: How do they keep up with HMRC legislation, and how do they ensure your payroll is always compliant?
• Cost Structure: Understand their pricing model – per employee, per pay run, or a flat fee? Are there hidden charges?
• Scalability: Can the service grow with your business? If you plan to expand, will the payroll solution be able to handle increased employee numbers or international payroll?
• Reporting and Analytics: What kind of reports can they generate? Do they offer insights into labour costs, trends, or other valuable metrics?

Services Offered by UK Payroll Companies

Beyond the core function of paying employees, modern payroll companies offer a suite of services designed to simplify HR processes and ensure regulatory adherence.

This is where the true value often lies, moving beyond simple data processing to strategic partnership.

Core Payroll Processing

This is the bread and butter.

It involves calculating gross pay, deducting PAYE Pay As You Earn tax, National Insurance contributions NICs, student loan repayments, and any other statutory or voluntary deductions. Workful status

• Gross to Net Calculations: The precise calculation of all earnings and deductions to arrive at the final take-home pay.
• Payslip Generation: Producing compliant payslips, often delivered electronically through secure portals.
• RTI Real Time Information Reporting: Submitting real-time data to HMRC on or before payday, a legal requirement since 2013. HMRC data shows that over 99% of employers now submit payroll information via RTI.
• End-of-Year Processing: Handling P60s, P45s, and other year-end submissions to HMRC.
• Statutory Payments: Managing Statutory Sick Pay SSP, Statutory Maternity Pay SMP, Statutory Paternity Pay SPP, and other parental leave payments.

Pension Auto-Enrolment Management

Since 2012, all eligible UK employers must automatically enrol their employees into a workplace pension scheme.

This is a complex area, and payroll companies play a vital role in ensuring compliance.

• Worker Assessment: Identifying eligible jobholders, non-eligible jobholders, and entitled workers.
• Contribution Calculation: Calculating both employer and employee contributions accurately.
• Pension Provider Integration: Liaising with pension providers e.g., NEST, The People’s Pension, Aviva to ensure smooth data transfer and payment.
• Re-enrolment: Managing the triennial re-enrolment process. According to The Pensions Regulator, over 10 million workers have been auto-enrolled into workplace pensions since its introduction.

HMRC Compliance and Reporting

Staying on the right side of HMRC is non-negotiable.

Payroll companies invest heavily in keeping up-to-date with legislative changes and ensuring their clients remain compliant.

• Tax Code Updates: Applying correct tax codes as issued by HMRC.
• National Insurance Categories: Ensuring correct NIC categories are used for different employee types.
• Apprenticeship Levy: Advising and managing the Apprenticeship Levy for employers with a pay bill exceeding £3 million.
• Tax Year End Reporting: Submitting all necessary year-end returns e.g., FPS, EPS to HMRC. Penalties for non-compliance can range from £100 to £1,000 per month for late submissions, depending on the number of employees.

HR Integration and Advisory Services

Many payroll providers now offer integrated HR platforms, recognizing the symbiotic relationship between payroll and human resources. My workful app

Some even offer advisory services to help businesses navigate complex employment law.

• HR Software Integration: Providing platforms that consolidate employee data, leave management, performance reviews, and recruitment alongside payroll.
• Employee Self-Service Portals: Secure online portals where employees can view payslips, P60s, request leave, and update personal details, reducing administrative burden.
• HR Advisory: Offering expert advice on employment law, disciplinary procedures, grievances, and best practices. This can be invaluable for SMEs without dedicated in-house HR teams.
• Time and Attendance Tracking: Integrating with systems that track employee hours, making payroll processing more accurate and efficient.

Leading UK Payroll Software Providers

While many companies offer fully managed payroll services, some businesses prefer to manage payroll in-house using dedicated software.

This provides greater control but requires internal expertise.

Sage Payroll

Sage is a household name in UK business software, particularly popular among small and medium-sized enterprises SMEs. Their payroll software is known for its user-friendliness and integration with other Sage accounting products.

• Key Features:
  • Automated Calculations: Handles PAYE, NICs, statutory payments, and pensions automatically.
  • RTI Compliance: Ensures all submissions to HMRC are made on time and accurately.
  • Employee Self-Service: Provides an online portal for employees to view payslips and P60s.
  • Integration: Seamlessly integrates with Sage 50 Accounts and other Sage business products.
  • Reporting: Offers a range of customizable reports for financial analysis and compliance.
• Best For: SMEs, businesses already using Sage accounting software, and those who want an intuitive, feature-rich in-house payroll solution.
• Market Share: Sage holds a significant share of the UK SME software market, with an estimated 15-20% of businesses using their accounting or payroll products.

Xero Payroll via HMRC Recognition

Xero is primarily known for its cloud-based accounting software, but it offers integrated payroll functionality, particularly strong for smaller businesses. Workful pay login

Xero’s payroll is generally considered intuitive and modern.

*   Cloud-Based: Accessible from anywhere with an internet connection.
*   Automated Payslips: Generates payslips automatically after each pay run.
*   Pension Auto-Enrolment: Integrates with leading pension providers like NEST and The People's Pension.
*   HMRC Submissions: Direct submission of RTI data to HMRC.
*   Employee Self-Service: Employees can access payslips and apply for leave via the Xero Me app.

• Best For: Small businesses, startups, and those who prefer a fully cloud-based, integrated accounting and payroll solution. Xero reported over 1 million subscribers in the UK as of 2023.

QuickBooks Payroll

QuickBooks, another global giant in accounting software, also offers robust payroll capabilities designed to integrate seamlessly with its accounting platform.

It’s popular for its comprehensive features and scalability.

*   Full-Service Payroll: Handles all aspects of payroll, including calculations, submissions, and year-end reporting.
*   Automatic Tax & NICs: Calculates and deducts correct amounts.
*   Pension Setup: Supports auto-enrolment and pension contributions.
*   HR Features: Some plans include HR functionalities like employee onboarding and document management.
*   Integration with QuickBooks Accounting: Creates a unified financial and payroll system.

• Best For: Small to medium-sized businesses already using QuickBooks accounting software, and those looking for an all-in-one financial management solution. QuickBooks serves over 7 million customers globally, with a strong UK presence.

BrightPay

BrightPay is a highly-rated, user-friendly payroll software known for its comprehensive features and exceptional support.

It’s often praised for its ease of use, even for those new to payroll. Workful salary paycheck calculator

*   Multi-Company & Multi-User: Suitable for businesses with multiple entities or for accountants managing payroll for multiple clients.
*   Automated RTI: Real-time data submissions to HMRC.
*   Extensive Pension Integration: Connects with over 18 pension providers.
*   Furlough Pay Calculator: Updated quickly during periods of change like the COVID-19 pandemic.
*   Freephone Support: Known for excellent customer service.

• Best For: SMEs, accountants, and payroll bureaus looking for powerful, intuitive payroll software with strong support. BrightPay supports over 330,000 employers across the UK and Ireland.

Choosing Between In-House Payroll Software and Fully Managed Service

This is a fundamental decision that significantly impacts your operational efficiency and compliance burden.

It’s a classic build vs. buy dilemma, but for payroll.

Each approach has distinct advantages and disadvantages.

Advantages of Fully Managed Payroll Service

Outsourcing your payroll to a dedicated company can be a must, especially for businesses where payroll isn’t a core competency.

• Reduced Administrative Burden: The most immediate benefit. You hand over the responsibility of calculations, submissions, and compliance, freeing up your internal team. A 2022 survey found that 58% of businesses cited “reducing administrative burden” as the primary reason for outsourcing payroll.
• Guaranteed Compliance: Payroll companies are experts in HMRC regulations, tax law, and pension auto-enrolment. They stay abreast of changes, minimizing your risk of fines or penalties. They effectively act as your shield against ever-shifting legislative sands.
• Access to Expertise: You gain access to a team of payroll specialists without having to hire them internally. This is invaluable for complex queries or unusual scenarios.
• Cost Savings Indirect: While there’s a direct cost, you save on software licenses, training, internal staff time, and the potential costs of non-compliance fines, rectifying errors.
• Enhanced Security: Reputable payroll providers use advanced security measures to protect sensitive employee data, often more robust than what a small business can implement internally.
• Scalability: Managed services can easily scale up or down with your business needs, whether you’re hiring rapidly or experiencing seasonal fluctuations.

Disadvantages of Fully Managed Payroll Service

It’s not without its drawbacks, and it’s essential to consider these before making a decision. Workful new grad

• Loss of Direct Control: You hand over a critical function, which might feel uncomfortable for some business owners.
• Dependency on Provider: You become reliant on the provider’s systems and processes. Any issues on their end could impact your employees.
• Cost Direct: There’s a recurring fee for the service, which for very small businesses, might seem higher than doing it in-house though this often overlooks the hidden costs of in-house.
• Less Flexibility for Custom Reports: While providers offer standard reports, highly customized reporting might be less straightforward than with in-house software where you have direct database access.

Advantages of In-House Payroll Software

Managing payroll internally using software can be appealing for those who prefer maximum control and have the necessary resources.

• Full Control: You have complete oversight of the entire payroll process.
• Data Accessibility: Direct access to all your payroll data for custom reporting and analysis.
• Lower Direct Cost Potentially: For very small businesses, the annual software license might be cheaper than a managed service fee, assuming you have the internal staff capacity and expertise.
• Integration with Existing Systems: Often easier to integrate with your existing accounting or HR software if you’ve chosen compatible platforms.

Disadvantages of In-House Payroll Software

The challenges often outweigh the perceived benefits for many businesses, especially as they grow.

• Significant Time and Resource Commitment: Payroll is time-consuming and requires dedicated staff. Studies suggest that SMEs spend an average of 10-15 hours per month on payroll processing alone.
• High Risk of Non-Compliance: Without specialist knowledge, staying updated with ever-changing HMRC legislation is incredibly difficult, leading to a higher risk of errors and fines.
• Need for Internal Expertise: Requires trained staff who understand tax, National Insurance, pensions, and statutory payments.
• Software Updates and Maintenance: You’re responsible for ensuring the software is always updated and correctly configured.
• Security Concerns: You bear the full responsibility for securing sensitive employee financial data.

For many businesses, the benefits of expertise, compliance, and reduced administrative burden often tip the scales in favour of a fully managed payroll service.

It allows you to leverage specialist knowledge and technology without the overhead.

Industry-Specific Payroll Considerations in the UK

Different industries often have unique payroll complexities, from varying pay structures to specific regulatory requirements. A good payroll partner understands these nuances. Workful phone support

Retail and Hospitality

These sectors are characterized by high staff turnover, part-time and seasonal workers, varied shift patterns, and often, tips and tronc schemes.

• High Turnover: Requires efficient onboarding and offboarding processes.
• Flexible Hours: Complex calculations for variable hours, overtime, and irregular shifts.
• Tips and Tronc Schemes: Proper administration and taxation of tips, especially through a ‘tronc’ system where an independent troncmaster distributes tips. HMRC rules on tronc are specific and require careful handling.
• Minimum Wage Compliance: Ensuring all workers, especially young workers, are paid at least the National Minimum Wage or National Living Wage for their age bracket.
• Statutory Holiday Pay: Calculating holiday pay for irregular hours workers has specific rules that are frequently updated.

Construction CIS Scheme

The Construction Industry Scheme CIS adds a layer of complexity for contractors and subcontractors, requiring specific tax deductions at source.

• CIS Deductions: Contractors must verify subcontractors with HMRC and deduct 20% or 30% tax from payments for construction work, unless the subcontractor has gross payment status.
• Monthly CIS Returns: Contractors must submit monthly returns to HMRC detailing payments made and deductions withheld.
• Verification: Processes for verifying subcontractor status with HMRC.
• Self-Employed vs. Employed Status: Navigating the often blurry line between employed and self-employed status in construction to ensure correct tax and NICs are applied. HMRC scrutiny on this area is high.

Healthcare

The healthcare sector often deals with complex rotas, unsocial hours pay, on-call payments, and specific NHS pension schemes.

• Complex Rota Management: Calculating pay for nurses, doctors, and other healthcare professionals working varying shifts, including nights, weekends, and on-call.
• Unsocial Hours Payments: Specific uplift rates for working outside of standard hours.
• NHS Pensions: Managing contributions to the NHS Pension Scheme, which has its own set of rules and reporting requirements.
• Agency Staff: Managing payments to agency workers who may be on different payroll terms.

Technology and Startups

While often having simpler pay structures, tech companies and startups often deal with share schemes e.g., EMI options, global mobility, and rapid scaling.

• Share Schemes: Proper taxation and reporting of employee share options e.g., Enterprise Management Incentive – EMI schemes, which have specific HMRC rules.
• Rapid Growth: The need for scalable payroll solutions that can quickly accommodate new hires.
• Global Mobility: For tech companies with international ambitions, managing payroll for employees in different countries, or for those relocating.
• Contractors vs. Employees: Often high usage of contractors, requiring clear status determination to avoid misclassification.

A payroll provider that understands these industry-specific challenges can offer tailored solutions, reducing risk and improving efficiency for businesses operating in these sectors. Workful salary calculator california

The Future of Payroll: Technology and Trends

Payroll is not static.

Staying ahead of these trends is crucial for efficient and future-proof payroll operations.

Cloud-Based Payroll Systems

The shift to cloud computing has profoundly impacted payroll, offering unprecedented flexibility, accessibility, and security.

• Accessibility: Payroll can be managed from anywhere, anytime, facilitating remote work and flexible operations. 90% of UK businesses now use at least one cloud-based application.
• Real-Time Data: Instant access to payroll data, enabling quicker decision-making and better financial forecasting.
• Automatic Updates: Software updates and legislative changes are applied automatically by the provider, reducing the burden on users.
• Enhanced Security: Cloud providers invest heavily in robust security measures, data encryption, and disaster recovery, often exceeding what individual businesses can afford.
• Scalability: Easily scales up or down based on employee numbers without significant infrastructure investment.

Artificial Intelligence AI and Machine Learning ML

AI and ML are beginning to revolutionize payroll by automating repetitive tasks, identifying errors, and providing deeper insights.

• Automation of Data Entry: AI can automate the extraction of data from timesheets, expense claims, and new hire forms, reducing manual input and errors.
• Error Detection: ML algorithms can analyze payroll data to identify anomalies, potential errors, or fraudulent activities that human eyes might miss.
• Predictive Analytics: AI can help forecast future payroll costs, identify trends in absenteeism, or predict staffing needs based on historical data.
• Chatbots for Employee Queries: AI-powered chatbots can handle routine employee questions about payslips, holidays, or tax codes, freeing up HR/payroll staff.

Integrated HR and Payroll Platforms

The convergence of HR and payroll into unified platforms is a major trend, offering a holistic view of employee data and streamlining workflows. Workful pay by check

• Single Source of Truth: All employee data personal details, salary, performance, leave resides in one system, ensuring consistency and accuracy.
• Streamlined Workflows: Onboarding, offboarding, leave management, and performance reviews can trigger automatic payroll adjustments, reducing manual intervention.
• Improved Employee Experience: Employees benefit from a single portal for all their HR and payroll needs.
• Data-Driven Insights: Integrated data allows for richer analytics on workforce costs, productivity, and retention. A unified system can provide data for metrics like “cost per hire” or “turnover cost,” which are increasingly vital for strategic HR.

Enhanced Data Security and Privacy GDPR Compliance

With increasingly stringent data protection regulations like GDPR, robust security and privacy measures are paramount for payroll providers.

• GDPR Compliance: Payroll companies must ensure all personal data is processed lawfully, transparently, and securely, with strict protocols for data access, storage, and deletion. Fines for GDPR breaches can be up to €20 million or 4% of global annual turnover, whichever is higher.
• Encryption: Data is encrypted both in transit and at rest to prevent unauthorized access.
• Regular Audits: Providers undergo regular security audits and certifications e.g., ISO 27001 to demonstrate compliance.
• Access Controls: Strict role-based access controls ensure that only authorized personnel can view or modify sensitive payroll data.

The future of payroll is automated, intelligent, and highly integrated, moving from a purely transactional process to a strategic function that supports overall business objectives.

Legal and Ethical Considerations in UK Payroll

Beyond the technical aspects, payroll involves significant legal and ethical responsibilities. Compliance isn’t just about avoiding fines.

It’s about fair treatment of employees and upholding legal obligations.

National Minimum Wage and National Living Wage

A fundamental legal requirement is to ensure all employees are paid at least the legally mandated minimum wage. Workful offices

• Age-Related Rates: The National Minimum Wage NMW has different rates for different age groups under 18, 18-20, 21-22, while the National Living Wage NLW applies to those aged 23 and over.
• Compliance Checks: HMRC regularly conducts checks and can impose penalties for underpayment, plus require back pay. In 2022-23, HMRC identified £17.2 million in NMW/NLW arrears for over 130,000 workers.
• Apprentices: Specific rules apply to apprentices, often with a dedicated apprentice rate.

Statutory Deductions and Payments

Understanding and correctly applying all statutory deductions and payments is critical for compliance.

• PAYE Pay As You Earn: Income tax deducted directly from earnings.
• National Insurance Contributions NICs: Contributions made by both employees and employers towards state benefits. Different categories apply based on employment status and earnings.
• Student Loan Deductions: Correctly calculating and deducting student loan repayments based on plan type.
• Attachment of Earnings Orders AEOs: Legally mandated deductions for debts e.g., child support, court fines.
• Statutory Sick Pay SSP: Payments to employees who are off sick for more than 3 days.
• Statutory Maternity/Paternity/Adoption Pay: Payments for various types of parental leave.

Data Protection GDPR and Confidentiality

Payroll involves highly sensitive personal and financial data, making robust data protection and confidentiality measures paramount.

• Lawful Basis for Processing: Ensuring there’s a legal basis for collecting and processing employee data e.g., contractual necessity.
• Data Minimization: Only collecting data that is necessary for payroll and employment purposes.
• Security Measures: Implementing strong technical and organizational security to protect data from unauthorized access, loss, or destruction.
• Employee Rights: Upholding employee rights under GDPR, such as the right to access their data, rectify inaccuracies, or request deletion.
• Confidentiality Agreements: Ensuring all staff involved in payroll are bound by strict confidentiality agreements. Breaches of data confidentiality can severely damage a business’s reputation and lead to substantial fines.

Ethical Considerations in Payroll

Beyond legal compliance, ethical considerations ensure fair and transparent treatment of employees.

• Transparency: Being clear and transparent with employees about their pay, deductions, and how their data is handled.
• Fairness: Ensuring pay policies are applied consistently and fairly across the workforce.
• Timeliness: Paying employees accurately and on time, as delayed or incorrect payments can cause significant stress and financial hardship.
• Privacy: Respecting employee privacy and only sharing their data with authorized parties for legitimate purposes.
• Accessibility: Providing easy access to payslips and other payroll information, often through secure employee portals.

For a Muslim business, these legal and ethical considerations align well with Islamic principles of justice Adl, trustworthiness Amanah, and ensuring the rights of workers are upheld.

Paying wages accurately and on time is a matter of fulfilling a trust, as mentioned in various Islamic teachings. Workful employer login

Getting Started: Steps to Select Your UK Payroll Provider

You’re convinced that a dedicated payroll solution is the way to go.

But how do you actually make the jump and choose the right partner? Here’s a practical, step-by-step approach.

1. Define Your Needs and Budget

Before you even look at a single company, get clear on what you need and what you can afford. This will narrow down your options significantly.

• Current State Assessment:
  • How many employees do you have?
  • Are they salaried, hourly, or a mix?
  • Do you have specific payment complexities e.g., commissions, bonuses, shift differentials, tips?
  • What existing accounting/HR software do you use?
  • What are your biggest pain points with your current payroll process?
• Future Needs:
  • Do you plan to grow significantly in the next 1-3 years?
  • Are you considering international expansion?
  • Do you want integrated HR functionalities down the line?
• Budget:
  • What’s your realistic monthly or annual budget for payroll services? Be prepared for per-employee or per-pay-run pricing models. Don’t just look at the headline price. ask about setup fees, year-end charges, and support costs.

2. Research and Shortlist Potential Providers

Based on your needs, start identifying companies that seem like a good fit.

Use online searches, industry reviews, and recommendations. Workful investors

• Initial Search: Use terms like “UK payroll services,” “small business payroll UK,” “managed payroll solutions,” or “payroll software UK.”
• Review Sites: Check out independent review platforms e.g., Capterra, G2, Trustpilot for user feedback and ratings. Pay attention to comments on customer support, ease of use, and reliability.
• Industry Accreditations: Look for providers accredited by organizations like the CIPP Chartered Institute of Payroll Professionals or those with ISO certifications for data security.
• Key Players: Consider the major players identified earlier ADP, IRIS, Sage, Moorepay, activpayroll as a starting point.

3. Request Demos and Proposals

Once you have a shortlist of 3-5 providers, reach out to them. This is where you get into the specifics.

• Personalized Demos: Ask for a live demonstration of their system, tailored to your specific business needs. Don’t just watch a generic webinar.
• Detailed Proposals: Request a comprehensive proposal that clearly outlines:
  • All services included.
  • Pricing structure break down all fees.
  • Implementation timeline and process.
  • Customer support details hours, channels, dedicated account manager?.
  • Data security measures and GDPR compliance.
  • Integration capabilities with your existing software.
• Ask Tough Questions: This is your chance to probe.
  • How do they handle legislative changes?
  • What is their typical response time for support queries?
  • Can they provide references from businesses similar to yours?
  • What’s their disaster recovery plan?
  • How do they ensure data confidentiality?

4. Check References and Reviews

Don’t just take their word for it.

Speak to existing clients and delve deeper into reviews.

• Client References: Ask the providers for references from businesses of similar size and industry. Prepare a list of specific questions to ask the references about their experience.
• Online Reputation: Re-read reviews on various platforms. Look for patterns in feedback, both positive and negative.
• Case Studies: Review any case studies or success stories they publish, but take them with a grain of salt – they are marketing materials.

5. Evaluate and Make Your Decision

Bring all the information together and make an informed choice.

• Scorecard Approach: Create a simple scorecard with your key criteria e.g., cost, features, support, integration, scalability and rate each provider against them.
• Total Cost of Ownership: Look beyond just the monthly fee. Factor in setup costs, potential for errors if doing it in-house, and the value of your time saved.
• Contract Review: Carefully read the contract. Pay attention to contract length, termination clauses, and any hidden fees.
• Trust and Relationship: Ultimately, you’re entering a long-term partnership. Choose a provider you feel comfortable communicating with and who understands your business ethos.

By following these steps, you can confidently select a UK payroll company that not only meets your current needs but also supports your business’s growth and ensures compliance without the headache. Workful customer service code

Frequently Asked Questions

What is the primary purpose of a payroll company in the UK?

The primary purpose of a payroll company in the UK is to manage the complex process of paying employees accurately and on time, ensuring full compliance with HMRC regulations, National Insurance contributions, pension auto-enrolment, and other statutory deductions.

Is it mandatory for UK businesses to use a payroll company?

No, it is not mandatory for UK businesses to use a payroll company.

Businesses can choose to manage payroll in-house using software, but outsourcing provides expertise, compliance assurance, and reduces administrative burden.

How much does a payroll company cost in the UK?

The cost of a payroll company in the UK varies widely, typically ranging from £5 to £20 per employee per month for basic services. More comprehensive services, higher employee counts, and additional HR features will increase the cost. Some providers charge a flat monthly fee, while others charge per pay run.

What is HMRC RTI and how do payroll companies handle it?

HMRC RTI Real Time Information requires employers to submit payroll information to HMRC on or before employees’ payday. Employee fte

Payroll companies handle this by automatically submitting the necessary FPS Full Payment Submission and EPS Employer Payment Summary reports directly to HMRC through their compliant software.

Do payroll companies manage pension auto-enrolment?

Yes, most reputable payroll companies in the UK offer comprehensive pension auto-enrolment management, including worker assessment, calculation of contributions, liaison with pension providers like NEST, The People’s Pension, and ongoing compliance.

What are the main benefits of outsourcing payroll?

How do payroll companies ensure data security and GDPR compliance?

Reputable payroll companies ensure data security and GDPR compliance through robust measures such as data encryption in transit and at rest, secure data centres, strict access controls, regular security audits e.g., ISO 27001 certification, and comprehensive privacy policies aligned with GDPR principles.

Can a payroll company integrate with my existing accounting software?

Yes, many payroll companies and software solutions offer integrations with popular accounting software like Xero, QuickBooks, and Sage.

This streamlines data flow between systems and reduces manual data entry.

What should I look for in a payroll company’s customer support?

Look for a payroll company that offers responsive customer support through multiple channels phone, email, live chat, has a dedicated account manager, and provides clear service level agreements SLAs for response times.

What is a P60 and how does a payroll company provide it?

A P60 is a summary of an employee’s pay and the tax deducted in a tax year.

Payroll companies generate P60s at the end of each tax year by May 31st and provide them to employees, often through a secure online employee self-service portal.

What is a P45 and when is it issued?

A P45 is a document issued to an employee when they leave a job.

It details their pay and tax deductions up to their leaving date.

Payroll companies are responsible for generating and issuing P45s promptly when an employee leaves.

How do payroll companies handle statutory payments like SMP or SSP?

Payroll companies calculate and administer statutory payments like Statutory Maternity Pay SMP, Statutory Paternity Pay SPPP, Statutory Adoption Pay SAP, and Statutory Sick Pay SSP in accordance with HMRC rules, ensuring employees receive their entitlements correctly.

Do payroll companies handle CIS Construction Industry Scheme deductions?

Yes, some payroll companies specialize in or offer services for the Construction Industry Scheme CIS, managing subcontractor verification, applying correct tax deductions, and submitting monthly CIS returns to HMRC.

What is an employee self-service portal?

An employee self-service portal is a secure online platform provided by payroll companies where employees can view and download their payslips, P60s, update personal details, and sometimes request leave or access HR documents, reducing administrative tasks for employers.

How often do payroll companies process payroll weekly, monthly?

Payroll companies can process payroll according to your business’s needs, whether that’s weekly, fortnightly, four-weekly, or monthly. They adapt to your preferred pay frequency.

What if there’s a payroll error? Who is responsible?

If a payroll company makes an error, they are typically responsible for rectifying it and covering any penalties incurred as a direct result of their mistake, provided the client provided accurate initial data.

Their service agreement should outline this liability.

Can a payroll company advise on employment law?

Some larger payroll companies, especially those offering integrated HR services, may provide basic employment law advice or signpost to expert legal resources.

However, full legal advice typically comes from dedicated HR consultancy or legal firms.

How quickly can a payroll company set up my business?

The setup time for a payroll company varies depending on the provider and the complexity of your business, but it can range from a few days to a few weeks.

It often depends on how quickly you can provide the necessary employee and historical payroll data.

Do payroll companies handle year-end submissions to HMRC?

Yes, a key service of payroll companies is handling all year-end submissions to HMRC, including the final Full Payment Submission FPS, Employer Payment Summary EPS if needed, and generating P60s for all employees.

What are the signs of a good payroll company?

Signs of a good payroll company include: strong compliance record, excellent customer support, transparent pricing, robust data security, clear communication, positive client reviews, scalability, and the ability to integrate with other business systems.

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