The cheapest UK payroll software starts at £90/year for Moneysoft Payroll Manager – a Windows desktop application that handles HMRC RTI, auto-enrolment, and payslips for up to 20 employees. Cloud options start from £1.50/employee/month with Xero Payroll or £20/month with Sage.
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This guide compares the most affordable payroll software options for UK small businesses, covering what you get at each price point, what corners cheap software cuts, and when it makes sense to spend more. All pricing verified February 2026.
- Moneysoft costs just £90 annually - Cheapest full-featured UK payroll software handling RTI, auto-enrolment & CIS compliance
- HMRC Basic PAYE Tools free - Government software handles up to 9 employees but lacks advanced features & reporting
- Cloud options from £15 monthly - Budget providers like PayFit & Staffology offer competitive rates for small businesses
- Cheap software lacks HR features - Budget solutions typically exclude holiday tracking, employee self-service & advanced reporting
- Free version supports 9 employees maximum - HMRC’s tool becomes unsuitable once businesses reach 10+ staff members requiring upgrade
Cheapest Payroll Software at a Glance
The cheapest paid UK payroll software is Moneysoft at £90/year + VAT. HMRC’s Basic PAYE Tools is free but limited to 9 employees with no payslip generation.
| Software | Price | Type | Max Employees | Best For |
|---|---|---|---|---|
| HMRC Basic PAYE Tools | Free | Desktop | 9 | Sole traders with 1–9 employees |
| Moneysoft PM20 | £90/year + VAT | Desktop (Windows) | 20 | Budget-conscious small businesses |
| Moneysoft PM100 | £180/year + VAT | Desktop (Windows) | 100 | Accountants, multi-company payroll |
| Xero Payroll | £1.50/emp/month | Cloud (add-on) | Unlimited | Existing Xero accounting users |
| Sage Payroll | From £20/month | Cloud | 10 (base plan) | SMEs wanting cloud payroll |
| Staffology | From £39/month | Cloud | 19 payslips (base) | Modern API-first payroll |
Free Payroll Software: HMRC Basic PAYE Tools
HMRC’s free Basic PAYE Tools handles RTI submissions for up to 9 employees, but does not generate payslips, handle auto-enrolment, or process CIS.
HMRC provides free payroll software called Basic PAYE Tools (BPT). It handles the minimum requirements for running UK payroll:
- Calculate tax and National Insurance for up to 9 employees
- Submit Full Payment Submissions (FPS) and Employer Payment Summaries (EPS) to HMRC
- Record employee starter and leaver information
What it does NOT do:
- Generate payslips (you must create these separately)
- Handle auto-enrolment pensions
- Process CIS returns
- Manage BACS payments to employees
- Scale beyond 9 employees
Basic PAYE Tools is functional but bare-bones. If you have more than 9 employees, need payslips, or have pension obligations, you need paid software. For most businesses, spending £90/year on Moneysoft saves hours of manual work each month.
Budget Desktop Software: Moneysoft
Moneysoft Payroll Manager costs £90–£270/year + VAT and handles RTI, auto-enrolment, payslips, CIS, and P60s – the best value paid payroll software in the UK.
Moneysoft Payroll Manager is the cheapest fully featured UK payroll software. Three tiers cover different business sizes:
- PM20: £90/year + VAT – up to 20 employees, 1 employer
- PM100: £180/year + VAT – up to 100 employees, unlimited employers
- PM250: £270/year + VAT – up to 250 employees, unlimited employers
All tiers include RTI, auto-enrolment, CIS, payslip generation, P45/P60/P11D production, and HMRC submissions. The main limitation is it runs on Windows only – Mac and Linux users need a virtual machine or alternative software.
For a business with 15 employees, Moneysoft costs £7.50/month (£90/year) compared to Sage at £20+/month or Staffology at £39/month. That is a significant saving for businesses where cost is the primary concern.
Cheap Cloud Payroll Options
The cheapest cloud payroll is Xero Payroll at £1.50/employee/month (requires a Xero accounting plan from £16/month). Sage Payroll starts at £20/month standalone.
If you need cloud-based payroll (accessible from any device, automatic updates, no software installation), these are the most affordable options:
Xero Payroll – £1.50/employee/month, added to any Xero accounting plan (£16–£65/month). This is the cheapest per-employee cloud payroll, but only makes sense if you already use Xero for accounting. For 10 employees: £15/month payroll + £16/month accounting = £31/month total.
Sage Payroll – From £20/month for up to 10 employees. Standalone cloud payroll with no accounting plan required. Includes RTI, auto-enrolment, and payslip generation. For 10 employees: £20/month total.
Staffology – From £39/month for up to 19 payslips. More expensive but offers API integrations, developer-friendly tools, and a bureau mode for accountants. Best for businesses that need integrations with other software.
What Do You Sacrifice with Cheap Payroll Software?
Budget payroll software handles core payroll well but typically lacks HR features, employee self-service portals, advanced reporting, and dedicated support.
Cheaper payroll software covers the essentials – tax calculations, RTI, payslips, and auto-enrolment – but you may miss out on:
| Feature | Budget Software | Premium Software |
|---|---|---|
| HMRC RTI submissions | Yes | Yes |
| Auto-enrolment | Yes | Yes |
| Payslip generation | Yes | Yes |
| Employee self-service portal | Rarely | Usually |
| HR features (absence, documents) | No | Often included |
| Mobile app | No | Usually |
| Dedicated phone support | Limited | Yes |
| Multi-user access | Limited | Yes |
| API integrations | Rarely | Yes |
For most small businesses processing monthly payroll for under 20 employees, the core features in budget software are sufficient. The missing features become important when you grow beyond 20-30 employees, need multiple people accessing payroll, or want to connect payroll data to HR or accounting systems automatically.
Cost Comparison by Company Size
A 10-employee business pays £90/year with Moneysoft, £240/year with Sage, or £360/year with Xero Payroll – choose based on whether you need cloud access.
| Employees | Moneysoft | Sage Payroll | Xero Payroll | Staffology |
|---|---|---|---|---|
| 5 | £90/year | £240/year | £282/year* | £468/year |
| 10 | £90/year | £240/year | £372/year* | £468/year |
| 20 | £90/year | ~£360/year | £552/year* | £470/year |
| 50 | £180/year | ~£720/year | £1,092/year* | ~£700/year |
*Xero Payroll costs include the £16/month Starter accounting plan + £1.50/employee/month payroll add-on.
Moneysoft is the clear winner on price at every level. The trade-off is that it is desktop-only (Windows) and lacks cloud features. If you need cloud access, Sage Payroll offers the best value at the lower end, while Xero Payroll becomes more competitive at higher employee counts if you already use Xero for accounting.
Our Verdict
Moneysoft at £90/year is the cheapest proper UK payroll software. For cloud payroll, Sage at £20/month or Xero at £1.50/emp/month offer the best value.
If cost is your primary concern and you use Windows, Moneysoft Payroll Manager at £90/year is the best value payroll software available in the UK. It handles everything a small business needs – RTI, auto-enrolment, payslips, CIS – at a fraction of the cost of cloud alternatives.
If you need cloud-based payroll, Sage Payroll from £20/month is the most affordable standalone option. Xero Payroll at £1.50/employee/month is cheaper per employee but requires a Xero accounting subscription.
HMRC’s free Basic PAYE Tools works for sole traders with 1–9 employees, but the lack of payslip generation and auto-enrolment handling means most businesses will need paid software. The £90/year for Moneysoft is a worthwhile investment for any business running payroll. For more options, see our full best payroll software comparison, our payroll costs guide, or our review of the best outsourced payroll companies if you would rather hand payroll off entirely.
