A plain-English guide to UK small business payroll costs — what software costs, what a managed bureau charges, what is included, and where the real cost difference lies.
Payroll costs for a UK small business range from £10–£60 per month for payroll software (plus the owner's time to operate it) to £45–£200 per month for a managed payroll bureau that handles everything. For a business with 1–10 employees, a managed bureau typically costs between £45 and £249 per month including PAYE calculations, payslips, HMRC RTI submissions, starters and leavers, pension figures and all monthly deadlines.
The subscription cost of payroll software looks cheap. Xero Payroll sits inside the Xero subscription. BrightPay charges per employer. Most software costs under £600 per year.
The real cost is different. Running payroll software correctly every month takes time — typically one to three hours for a basic payroll: collecting data, entering starters and leavers, checking tax codes, running the payroll, reviewing payslips, filing RTI, confirming the PAYE liability and making the payment. For a business owner whose time is worth £50–£100 per hour, that is £600–£3,600 per year in time cost on top of the software subscription.
A managed bureau at £149 per month — £900 per year — includes all of that. The business owner's job is to send the payroll data and confirm approval. Total monthly time: under ten minutes.
Payroll bureau pricing is based on several factors. Understanding them makes it easier to get an accurate quote.
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