Best Payroll Software for Small Businesses in the UK

Small businesses in the UK need to handle payroll operations efficiently. Choosing suitable payroll software can minimise tax-related errors while reducing time spent on compliance obligations through the HMRC requirements. This blog provides comprehensive information about the Best Payroll Software for Small Businesses in the UK with their recognition by HMRC. 

HMRC-Recognised Payroll Software

The UK government maintains an approved list of Best Payroll Software for Small Businesses in the UK which fulfils HMRC requirements for PAYE tax reporting and maintains regulatory compliance. Users can choose from available free and paid software solutions. The payroll software solution facilitates HMRC RTI reporting by automatically doing tax calculations and pension contribution management. 

Best Payroll Software for Small Businesses

• Free Payroll Software

Free payroll software serves as an ideal solution for small businesses that want to handle payroll duties without financial expenses. It handles essential payroll operations which involve tax computation, RTI compliance, and employee payment control as well as it ensures HMRC compliance. Need help managing your payroll? Explore our Payroll Services for Small Businesses and let us take care of it while you grow your business. Selecting the best payroll software for small businesses in the UK can efficiently streamline payroll tasks.

• HMRC Basic PAYE Tools

Small organisations with up to 10 staff members should use this free payroll software because it meets their requirements. It enables organisations to handle vital payroll tasks together with their HMRC compliance needs.

            Key Features:

• Free and HMRC-approved:

Small businesses can use this system without any cost or HMRC approval because It is free and comes from HMRC. 

• Supports PAYE, NI, and statutory payments:

It helps companies fulfil their requirements for tax withholding and national insurance deductions plus mandatory payroll funds.

• RTI submissions:

It generates legitimate payroll information for HMRC reports through a Real-Time Information submission format.

• Limited features:

It does not provide advanced tools such as payslip creation or pension handling.

• Payroo

Users can access Payroo's free payroll system in the cloud to streamline operations and maintain UK payroll compliance.

Key Features:

• Free cloud payroll software:

In this, there are no cost and subscription fees.

• Automatic RTI submissions:

It ensures tax compliance without manual intervention.

• Pension auto-enrolment:

An automatic pension enrollment feature assists businesses in handling employees’ pensions.

• Employee Portal:

It provides access to payslips and payroll details to the employee.

• KeyPay (Free Plan):

Small businesses can use KeyPay to manage their payroll automatically without paying any fees.

Key Features:

• Automated payroll processing:

Our system automatically handles payroll work to save employees from manual salary calculation tasks.

• Free for small businesses: 

Small businesses and startups can use the free version since it suits their needs.

• Cloud-based access:

It enables payroll management from anywhere.

• Custom payroll reports:

 It provides a perception of payroll trends and finances.

• Paid Payroll Software

Businesses that need complex payroll features and extensive management functionality should consider paid payroll software as a valuable solution.  Businesses that need complex payroll features and extensive management functionality should consider the best payroll software for small businesses in the UK as a valuable solution. 

• Sage Payroll: 

Business users prefer Sage Payroll because it automates payroll processing and meets all HMRC requirements. It works best for companies that need dependability and expansion capabilities.

Key Features:

• Automated tax calculations:

It automatically handles all tax deductions like PAYE and NI for your employees.

• Multi-user access:

Multiple users in the team can handle payroll through specific permission settings.

• Pension auto-enrolment:

It ensures compliance with UK pension laws.

• Cloud storage:

Its cloud storage system creates safe ways to view payroll data from anywhere.

• Xero Payroll:

Xero Payroll coordinates smoothly with Xero Accounting for businesses that already use this financial platform, it is a seamless choice. The system makes payroll operations and tax submissions easier to handle. Handling payroll in-house can be stressful—why not leave it to professionals who specialise in payroll services for cics.

Key Features:

• Real-time tax and NI calculations:

It Keeps payroll tax deductions accurate and up to date.

• Employee self-service:

Through this system, employees can look at their pay records plus submit time off requests.

• Automated RTI submissions:

It automatically submits RTI data to HMRC to maintain reporting requirements.

• Direct payments: 

Allows salary payments directly from Xero.

• BrightPay

BrightPay is a user-friendly payroll software designed for businesses that need compliance and automation features.

Key Features:

• HMRC RTI reporting:

It ensures accurate tax reporting. 

• Automatic pension enrolment:

Automatic enrollment into workplace pension programs enables companies to follow their pension plan rules.

• Multi-business support:

It is suitable for accountants who handle multiple payrolls.

• Custom payroll reports:

It generates personalised payroll summaries.

• FreeAgent

FreeAgent is cloud-based accounting and payroll software that is particularly made for freelancers and small-business owners.

• Automated payroll processing:

It automates payroll duties to process taxes, NI, and pension amounts accurately.

• Bank integration:

It links your UK bank accounts to save time at payout and bank check verification stages.

• Payslip generation:

It provides professional templates of payslips.

• Direct HMRC tax submission:

It allows users to send tax payments directly to HMRC for effortless tax reporting. 

Key Factors When Choosing Payroll Software

Selecting the best payroll software for small businesses in the UK depends on multiple factors:

• HMRC Compliance:

Select a software system that HMRC recognises to simplify your PAYE reporting processes.

• Scalability:

Select a software system that can grow your business.

• Integration:

A user interface that is easy to use, helps people to handle payroll tasks better.

• Cost:

When you compare pricing, look at both listed and hidden cost elements.

• Support and Updates:

Select software that gets updated frequently and offers satisfactory help services.

• Security:

It should prioritise cloud solutions that offer data encryption and secure backups.

Final Thoughts

Selecting the best payroll software for small businesses in the UK helps businesses automate payments effectively while following rules and regulations without mistakes.  Small companies and new businesses should choose free payroll tools while bigger firms need paid solutions with more automation features. For further HMRC-approved payroll software visit the website: To learn more about Payroll Services for Small Businesses, read our guides:

• What is a Payroll Provider? A Complete Guide!
• Does Small Business Need a Payroll? A Detailed Guide
• Should I Put Benefits and Expenses Through Payroll?
• How Does Outsourced Payroll Work? A Complete Guide

The content provided on Micro-Entity Accounts, including our blog and articles, is for general informational purposes only and does not constitute financial, accounting, or legal advice.