UK Payroll Software Costs 2026: What Businesses Pay

Most payroll software comparisons focus on features and user ratings. What they rarely show is how dramatically costs diverge as your headcount grows – and how the choice of pricing model (per-employee subscription vs annual licence vs managed service) can mean paying 15 times more for identical payroll compliance.

We verified pricing from 13 UK payroll providers between August and October 2026 and calculated the true annual cost of processing payroll at four real business sizes: 5, 20, 50, and 100 employees. The results reveal a pricing gap that most business owners never see coming. For a full buyer’s guide, see our roundup of the best payroll software for UK businesses.

Key Findings

At 20 employees, UK businesses pay between £95 and £576 per year for paid payroll software – a 506% range among providers with published pricing. At 100 employees, the gap widens further: Moneysoft’s annual licence costs £190 per year versus £2,880 for Sage’s per-employee model. Both are HMRC-recognised, process Real Time Information submissions, handle auto-enrolment pensions, and generate compliant payslips. The difference is entirely in pricing structure – annual licence versus per-employee SaaS versus per-payslip subscription – not in payroll compliance capability. This means UK businesses choosing payroll software on brand recognition or marketing alone could overpay by more than £2,000 per year at 100 employees for identical core functionality.

Four findings stand out. First, annual licence software like Moneysoft is dramatically cheaper than per-employee SaaS at any headcount above five – BrightPay offered the same model until it retired its desktop licence after 2025/26 – yet most mainstream comparisons omit these products. Second, Employment Hero offers genuinely free payroll for unlimited employees, with meaningful limitations. Third, six of 13 providers do not publish pricing at all. Fourth, BrightPay – formerly a cost-effective unlimited-employee option at £499/year on desktop – retired that product after 2025/26 and now prices by headcount on its online calculator: £127.20 + VAT a year for 5 employees and £1,051.20 for 100.

Which Providers Publish Pricing?

The table below covers all 13 providers we reviewed, showing pricing model, starting cost, and whether rates are published publicly. Providers marked “Quote only” do not disclose pricing without a sales call. All data verified from provider websites between August and October 2026.

Sources: Provider websites verified August to October 2026. Employment Hero “Direct Free Payroll” excludes employee self-service leave management. BrightPay’s desktop pricing was retired with the product after 2025/26; cloud pricing is by headcount on BrightPay’s calculator (one employer, paid annually). Cintra G-Cloud rate is a public sector framework price (software licence only, not full managed service).

True Annual Cost by Employee Count

The table below shows what businesses actually pay per year at four real headcounts. Calculations use each provider’s standard published rates with monthly payroll processing assumed. Xero and QuickBooks figures cover the payroll add-on cost only – both require a separate accounting subscription. Hardware and implementation costs are excluded.

Xero and QuickBooks payroll costs shown as add-on only. Xero accounting plans start from £18/month (Ignite); QuickBooks Online starts from £16/month (Simple Start) – these base costs are excluded from the table. Employment Hero free payroll excludes employee self-service leave management; HR plans start from £40/month. BrightPay figures are its cloud calculator prices for one employer paid annually (October 2026), since the desktop product was retired after 2025/26. All figures exclude VAT.

Pricing Models Explained: Annual Licence vs Per-Employee vs Subscription

Payroll software uses three distinct pricing structures, and the model matters more than the headline rate. Annual licence software charges a one-off yearly fee regardless of how many employees you process – meaning costs stay flat as you hire. Per-employee models charge monthly for each person on payroll, so costs scale directly with headcount. Subscription-plus-per-payslip models (like Staffology) charge a monthly base fee plus an incremental rate for each payslip above a threshold.

The Free Payroll Option: Employment Hero Direct Free

Employment Hero offers a genuinely free payroll tier – Direct Free Payroll – with no employee cap and no time limit. It covers automated pay runs, payslips, Real Time Information (RTI) submissions, auto-enrolment, and PensionSync integration. At any headcount, it costs £0 per year for basic payroll processing. The free tier does not include employee self-service leave management, which requires an HR plan starting at £40 per month (minimum charge, not simple per-employee billing).

For a business that only needs compliant payroll processing and manages leave via spreadsheet or a separate tool, the free tier is a legitimate option. For a business that wants integrated HR, absence management, or employee self-service (covered in our HR software guide), the HR plans add significant cost. At 20 employees, Employment Hero HR Essentials at £4 per employee a month comes to £80/month (£960/year), roughly 10 times the cost of Moneysoft’s £95/year annual licence – though the comparison is not direct, since HR Essentials includes far more than payroll.

Annual Licence vs SaaS: The Break-Even Point

Annual licence software becomes progressively cheaper relative to per-employee SaaS as headcount grows. Moneysoft’s PM100 licence at £190/year covers up to 100 employees, so against Xero’s £1.50-per-employee add-on the crossover arrives at 11 employees and the gap widens with every hire after that. Moneysoft and Xero’s payroll add-on cost almost the same for the smallest teams: at five employees Xero’s add-on works out to about £90/year against Moneysoft’s flat £95/year. From around six employees up, Moneysoft is cheaper and stays flat, while Xero keeps charging for every additional hire. BrightPay used to anchor this comparison with a £499 unlimited licence, but it retired that product after 2025/26 and now prices by headcount (£1,051.20 + VAT a year for 100 employees).

The break-even calculation is straightforward: divide the annual licence cost by the monthly per-employee rate to find the crossover employee count. BrightPay’s old unlimited desktop licence cost £499 per year (£41.58 per month); divided by Xero’s £1.50 per employee per month payroll add-on rate, the crossover sat at 28 employees. That licence was retired after the 2025/26 tax year, so re-run the calculation with a BrightPay calculator quote for your headcount.

On BrightPay’s current cloud prices, it undercuts Xero’s £1.50 per employee per month add-on from about 20 employees, and the gap widens as headcount grows: at 50 employees the annual saving is £208.80, and at 100 employees £748.80. This makes annual licence software the most cost-effective payroll option for growing UK SMEs – provided they can accept the trade-off of desktop-based processing rather than cloud access.

Managed Payroll: What Outsourcing Actually Costs

Managed payroll – where an external bureau processes payroll on your behalf – costs between £4 and £12 per employee per month based on UK industry pricing. For a deeper breakdown of payroll outsourcing costs by provider and headcount, see our companion guide. Six of the 13 providers we reviewed operate managed payroll services and do not publish rates publicly. The only verifiable public data point is Cintra’s G-Cloud 14 framework rate of £1.87 per user per month (software licence only, not full managed service).

At the industry mid-point of £8/employee/month, managed payroll costs £4,800 per year for 50 employees and £9,600 per year for 100 employees. Compared to Moneysoft at £190/year, outsourcing costs 25x more at 50 employees and 50x more at 100 employees. The premium buys you expertise, liability transfer, dedicated account management, and time savings – but not payroll accuracy itself, which HMRC-recognised software delivers automatically. The decision turns on whether your team has the capacity to process payroll in-house, not on whether software is accurate enough.

Which Software Is Right for Your Business Size?

The right payroll software depends primarily on three factors: your employee count, whether you need accounting integration, and whether cloud access matters. Below are recommendations by business size, based on annual cost data from our worked examples.

Six Providers That Don’t Publish Pricing

Six of the 13 providers we reviewed – Moorepay, ADP, Dayforce, PayEscape, Access People, and Cintra (PSSG) – do not publish standard pricing. All require a sales enquiry before costs are disclosed. This matters for two reasons. First, negotiating without a benchmark is expensive: the transparent-provider annual cost data in this study gives you a floor to negotiate from. Second, opaque pricing correlates with longer contract commitments – Cintra typically requires 36–60 month agreements, compared to month-by-month billing from Xero and QuickBooks, and annual renewals from BrightPay and Moneysoft.

The industry range for managed payroll (where most of these providers operate) is £4–£12 per employee per month. Cintra’s G-Cloud 14 public sector software licence rate of £1.87/user/month is a useful data point: it represents the software component only, not account management, bureau processing, or implementation. If you request a quote from any managed payroll provider, ask them to separate software licence costs from bureau service costs to enable like-for-like comparison. Accountancy practices running multi-client payroll can compare bureau-specific licensing in our guide to payroll software for accountancy bureaux.

How Pricing Has Changed: 2024 vs 2026

Three significant pricing changes have occurred in the UK payroll software market since 2024. Sage moved its payroll range from flat headcount tiers to a base-fee-plus-per-employee model – Essentials now starts at £12/month for 5 employees, then £2.40 per extra employee, with Standard (£23) and Premium (£34) tiers above it, after a further rise in 2026. Xero restructured its payroll add-on pricing in mid-2025 from flat per-plan fees to a per-employee model at £1.50/employee/month across most plans – a structural change that makes Xero significantly cheaper for small teams and more expensive for larger ones. Employment Hero introduced a free direct payroll tier, removing the previous minimum spend requirement for basic payroll processing.

The most significant change this year: BrightPay retired its desktop product at the end of the 2025/26 tax year and is now cloud-only, priced per employee through its online calculator. The £499/year unlimited licence is gone; the cloud calculator quotes £355.20 + VAT a year for 20 employees and £1,051.20 for 100. Businesses still running the old desktop product should check the cloud calculator price for their headcount.

Methodology

Summary: The Three Questions That Determine Your Best Option

Choosing payroll software comes down to three questions. First: how many employees do you have, and how fast are you growing? From about 6 to 20 employees, Moneysoft’s £95/year annual licence is the cheapest paid option – but it’s Windows-only. Between 21 and 100 employees, a flat annual licence (Moneysoft PM100 at £190/year) beats every per-employee SaaS product by a widening margin; BrightPay used to sit here too, but its cloud product is now priced per employee. Above 100 employees, the calculus shifts: per-employee SaaS with HR integration starts to earn back its premium through employee self-service and reduced HR admin time.

Second: do you need cloud access? Annual licence software such as Moneysoft requires a Windows machine and local installation; BrightPay is now cloud-only. Cloud-based products (Xero, QuickBooks, Sage, Staffology, Employment Hero) run in any browser, allow remote access, and integrate with accounting software directly – which is also why they make up most of the viable options for Mac users. The cloud premium is roughly £500–£1,250/year at 50 employees. Third: do you have the internal capacity to process payroll? If not, managed payroll at £4–£12/employee/month removes the burden – at a cost of roughly £2,400–£7,200/year for 50 employees – and transfers compliance liability to the bureau.

Clara Wenslow

Finance & Business Services Editor

Clara analyses SME finance and procurement markets, covering business loans, invoice finance, payroll, and related B2B services. She ensures each comparison and guide is transparent and data-driven.

Reviewed by

Sarah Mitchell

B2B Commerce & Finance Reviewer