A payroll bureau manages your entire payroll for £4-£15 per employee per month, while payroll software lets you process it yourself for £0-£45/month at 10 employees. Bureaux save time and transfer compliance risk; software costs less and gives you more control. The right choice depends on your employee count, payroll complexity, and how much time you can dedicate to payroll processing.
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This guide compares payroll bureaux and payroll software across cost, features, control, and compliance – with specific UK provider examples and clear recommendations for different business sizes. Software pricing checked between August and October 2026; bureau fees are typical ranges, not quotes.
- Software usually costs less for small teams - Free options cost £0, Moneysoft £95/year and Sage Payroll Standard £540/year for 10 employees, against £4-15 per employee monthly for a bureau
- A bureau cuts your payroll time to about 30 minutes a month - Outsourcing removes processing, RTI filing and year-end work, against 2-10 hours a month in-house
- Software suits teams under 20 employees - Simple fixed salaries take 2-3 hours a month to run, and a bureau starts to pay off at 20+ staff or with complex pay
- You stay legally liable either way - Bureau insurance usually covers errors the bureau causes, but HMRC holds you, the employer, responsible for PAYE compliance
- Choose bureaus for complex payroll needs - Multiple pay rates, contractors & benefits require expert handling that software struggles with
What Is a Payroll Bureau?
A payroll bureau is a specialist company that processes your payroll on your behalf – calculating pay, submitting RTI, generating payslips, and managing auto-enrolment for a monthly fee.
A payroll bureau is an outsourced service provider that handles all aspects of your payroll. You provide employee hours, salary changes, and new starter information each pay period. The bureau calculates gross-to-net pay, deducts tax and National Insurance, submits RTI reports to HMRC, generates payslips, processes auto-enrolment pensions, and handles year-end reporting.
Most bureaux assign a dedicated payroll administrator to your account. This person becomes familiar with your business, handles HMRC queries on your behalf, and ensures compliance with current legislation. Bureaux carry professional indemnity insurance – if they make an error, their insurance typically covers the cost, though you remain the legally responsible employer.
UK payroll bureaux include national providers like Moorepay, ADP, and Access People, as well as local accountancy firms that offer payroll as an add-on service. Many accountants effectively act as payroll bureaux for their clients.
What Is Payroll Software?
Payroll software is a tool you run yourself to calculate pay, generate payslips, and submit RTI to HMRC – ranging from free options to about £45/month for cloud platforms at 10 employees.
Payroll software automates the calculations and HMRC submissions, but you (or someone in your business) still process payroll each pay period. You enter hours, approve calculations, generate payslips, and click submit. The software handles the complex tax maths and HMRC formatting.
Options range from free (Collegia FreePayroll, HMRC Basic PAYE Tools) through budget desktop software (Moneysoft at £95/year) to cloud platforms (Sage from £12/month, Staffology from £43/month). Some integrate with accounting software – Xero Payroll at £1.50/employee/month works as an add-on to a Xero plan (from £18/month standard).
The key difference from a bureau: you are responsible for accuracy and timeliness. If payroll is submitted late or calculated incorrectly, the liability is yours. Software automates the hard parts, but compliance responsibility stays with you.
Bureau vs Software: Full Comparison
Bureaux cost more but save 2-10 hours per month and transfer compliance risk. Software costs less but requires your time and payroll knowledge.
| Factor | Payroll Bureau | Payroll Software |
|---|---|---|
| Monthly cost (10 emps) | £40-£150 | £0-£45 |
| Monthly cost (50 emps) | £200-£750 | £0-£221 |
| Your time per month | ~30 mins (data submission + approval) | 2-10 hours (full processing) |
| HMRC compliance | Bureau processes it (you stay legally liable) | Your responsibility |
| Payroll expertise needed | None – bureau handles everything | Basic to intermediate |
| RTI submissions | Bureau submits | You submit (software automates) |
| Payslip distribution | Bureau distributes | You generate and send |
| Auto-enrolment | Bureau manages | You manage (software calculates) |
| BACS payments | Often included | Manual bank transfers (usually) |
| Year-end processing | Bureau handles P60s, P11Ds | You process (software generates) |
| Data control | Shared with third party | Internal only |
| Flexibility | Limited to bureau’s schedule | Process anytime |
| Setup time | Bureau onboards you (1-2 weeks) | Self-setup (1-2 hours) |
Cost Comparison by Business Size
For 10 employees, a bureau costs £480-£1,800/year versus £0-£540/year for software. The gap narrows at 50+ employees where bureau per-head rates drop.
| Employees | Bureau (annual) | Moneysoft (annual) | Sage Standard (annual) | Free Software |
|---|---|---|---|---|
| 5 | £240-£900 | £95 | £276 | £0 |
| 10 | £480-£1,800 | £95 | £540 | £0 |
| 25 | £1,200-£4,500 | £190 | £1,332 | £0 |
| 50 | £2,400-£9,000 | £190 | £2,652 | £0 |
| 100 | £4,800-£18,000 | £190 | £5,292 | £0 |
Bureau costs assume £4-£15 per employee per month. Software costs from verified provider pricing. Free software is Collegia FreePayroll (unlimited employees).
At 25 employees a bureau costs £1,200-£4,500 a year against £190-£1,332 for software, so the saving runs from close to nothing (Sage Standard against a low bureau quote) to about £4,300 (Moneysoft against a high one). But this does not account for the 4-6 hours per month of your time – worth approximately £1,200-£2,900/year at a £25-£40/hour opportunity cost.
When you factor in time, the real cost difference narrows substantially. For a business owner earning £60,000/year who spends 5 hours monthly on payroll, the opportunity cost is roughly £1,730/year – making a £1,200/year bureau service effectively equivalent to “free” software.
When to Choose a Payroll Bureau
Choose a payroll bureau if you have complex pay structures, no payroll expertise, 20+ employees, or if your time is better spent running the business.
A payroll bureau is the better choice when:
- Nobody in the business understands payroll: Tax codes, NIC calculations, statutory payments, and auto-enrolment thresholds are complex. Getting them wrong costs money in penalties and corrections
- You have complex pay structures: Multiple pay rates, overtime, commission, salary sacrifice, CIS, or directors’ NIC – all increase error risk that a bureau handles routinely
- You value your time highly: If the business owner is the one doing payroll, those 4-6 hours per month could generate more revenue elsewhere
- You want compliance peace of mind: Bureaux carry professional indemnity insurance. Errors they cause are usually covered by their insurance, though you stay the legally responsible employer
- You are growing quickly: Adding employees, changing pay structures, and handling new statutory obligations is smoother with an experienced bureau managing the transitions
For provider recommendations, see our best outsourced payroll companies guide.
When to Choose Payroll Software
Choose payroll software if you have under 20 employees on simple salaries, someone comfortable with payroll processing, and want to minimise monthly costs.
Payroll software is the better choice when:
- You have a simple payroll: Under 20 employees on fixed monthly salaries with standard deductions. This is straightforward in any modern software
- Someone in the team knows payroll: An office manager, bookkeeper, or business owner with basic payroll knowledge can process a simple payroll in 2-3 hours per month
- Cost is the priority: Free software exists. Moneysoft at £95/year is among the cheapest paid options. The savings over a bureau are substantial
- You want control: You can run payroll on your schedule, make last-minute changes, and keep salary data entirely internal
- Your accountant offers review: Many accountants will check your payroll as part of their bookkeeping service – giving you professional oversight at a fraction of bureau cost
For software comparisons, see our best payroll software guide, cheapest payroll software guide, or our combined HR and payroll software roundup if you want both functions in one tool. For typical UK payroll budgets at each business size, our payroll costs guide breaks down the numbers.
The Hybrid Option: Software + Accountant Review
Many small businesses run payroll software themselves but have their accountant review each payroll run – combining low software cost with professional compliance oversight.
A third approach combines the cost savings of software with the safety net of professional oversight. You run payroll software (Sage, Xero, or Moneysoft – see how the first two compare on price and features), process payroll each month, and send the output to your accountant for review before final submission.
This typically costs the software fee (£0-£45/month) plus your accountant’s review time (£30-£60/month as part of an existing bookkeeping arrangement). Total cost: £30-£105/month – roughly half the price of a full bureau service but with professional error-checking included.
This is the most popular approach for UK businesses with 10-30 employees who already work with an accountant. It works especially well with Xero Payroll, where your accountant has direct access to your payroll data through their Xero practice dashboard – see our payroll software for accountants guide for the platforms practices typically use.
Our Verdict
Use payroll software if you have under 20 employees and basic pay structures. Use a bureau if you have 20+ employees, complex payroll, or no payroll expertise.
For most UK businesses under 20 employees with straightforward monthly salaries, payroll software delivers the best value. Free options like Collegia FreePayroll handle unlimited employees, and Moneysoft at £95/year adds BACS and CIS support. The 2-3 hours per month is manageable for a small team.
For businesses with 20+ employees, complex pay structures, or no internal payroll expertise, a payroll bureau is worth the extra cost. The time savings and compliance risk transfer justify the £4-£15/employee/month investment, especially when HMRC penalties for errors can quickly exceed the bureau fees.
If neither extreme fits, the hybrid approach – software plus accountant review – offers a practical middle ground. Our payroll outsourcing vs in-house guide goes deeper into the trade-offs of running payroll yourself versus handing it off. For a full comparison of UK payroll providers, see our best payroll software and best outsourced payroll companies guides.
