Xero Payroll is a per-employee add-on to any Xero accounting plan. It costs £1.50/employee/month on most plans, or £1.00/employee/month on Ultimate. If you already use Xero for accounting, adding payroll is the cheapest and most integrated option. Your payroll costs flow directly into your accounts with no manual data entry.
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Xero restructured its payroll pricing in mid-2025, moving from bundled employee allocations to a simple per-employee add-on model. This review covers the current pricing structure, what Xero Payroll includes, and how it compares to standalone payroll software for UK businesses.
- Costs £1.50 per employee per month - on most Xero plans, dropping to £1.00 on Ultimate, charged on top of your Xero accounting subscription
- Best for existing Xero users - the payroll add-on posts straight into your accounts, removing double entry and reconciliation work
- Built for small teams, not large workforces - Xero markets its built-in payroll for smaller businesses, so payroll-heavy or fast-growing firms may outgrow it
- Includes RTI and auto-enrolment compliance - core UK payroll features cover HMRC reporting and workplace pension duties automatically
- Cheaper standalone options exist - Sage Payroll runs about £20/month for 10 employees, while Xero adds £15 payroll on top of a £16+ accounting plan (roughly £31/month total), so Xero only wins if you already use it for accounting
Who Is Xero?
Xero is a New Zealand-founded cloud accounting platform with 4.3 million subscribers globally, known for its intuitive interface and extensive app marketplace.
Founded in 2006 in New Zealand, Xero is now one of the world’s largest cloud accounting platforms. It has over 4.3 million subscribers and around 5,000 employees. Forbes named it Most Innovative Growth Company in 2014 and 2015, and it is widely used by UK accountants and small businesses.
Xero’s payroll module is an add-on to its core accounting software – not a standalone product. This means you need a Xero accounting subscription (from £16/month) before you can add payroll.
Xero Payroll Pricing
Xero Payroll costs £1.50/employee/month on Ignite, Grow, and Comprehensive plans, or £1.00/employee/month on Ultimate. It is designed for small to mid-sized teams.
| Xero Plan | Plan Price | Payroll Included | Extra Employees | Total for 10 Employees |
|---|---|---|---|---|
| Ignite | £16/month | Add-on only | £1.50 each | £31/month |
| Grow | £37/month | 1 person | £1.50 each | £50.50/month |
| Comprehensive | £50/month | 5 people | £1.50 each | £57.50/month |
| Ultimate | £65/month | 10 people | £1 each | £65/month |
Each plan includes a set number of payroll people before extra charges apply: Ignite none (payroll is an optional add-on), Grow 1, Comprehensive 5, and Ultimate 10. Beyond that you pay £1.50 per additional employee, or £1 on Ultimate. Xero also runs a recurring new-customer offer of 80% off for the first six months. That discount applies to the accounting plan, not the payroll add-on, so always budget on the standard prices above.
Cost examples by headcount:
- 5 employees (Ignite, none included): £16 + 5 × £1.50 = £23.50/month (£282/year)
- 10 employees (Ignite): £16 + 10 × £1.50 = £31/month (£372/year)
- 20 employees (Grow, 1 included): £37 + 19 × £1.50 = £65.50/month (£786/year)
- 50 employees (Comprehensive, 5 included): £50 + 45 × £1.50 = £117.50/month (£1,410/year)
All Xero prices are quoted exclusive of VAT, so add 20% to the figures above for your true monthly cost. Xero also offers a one-month free trial on every plan. That lets you test pay runs, RTI submissions, and the accounting integration before you commit. Existing accounting customers can switch payroll on from within their current plan at any time, with no separate sign-up.
What Xero Payroll Includes
Xero Payroll includes HMRC RTI submissions, auto-enrolment, payslips, flexible pay schedules, employee self-service via the Xero Me app, and automatic accounting integration.
The payroll add-on is HMRC-recognised and covers everything a small UK business needs:
- HMRC RTI submissions – automatic Full Payment Submissions after each pay run
- Auto-enrolment – workplace pension management and PensionSync integration
- Payslip generation – automatic digital payslips for all employees
- Flexible pay schedules – weekly, fortnightly, four-weekly, or monthly
- Multiple pay rates – different rates for different roles or overtime
- Employee self-service – Xero Me app for payslips, leave requests, and personal details
- Timesheet integration – built-in timesheets that feed into payroll calculations
- Expense reimbursement – process employee expenses through payroll
- Accounting integration – payroll journal entries created automatically in Xero accounts
- Benefits tracking – track employee benefits and BIK reporting
The standout feature is accounting integration. After each pay run, Xero posts the journal entries to your accounts automatically. Employer NI, pension contributions, net pay, and PAYE liabilities all appear in your profit and loss statement with no manual input.
Pros and Cons
Xero Payroll is the best choice for existing Xero users wanting affordable, integrated payroll. Non-Xero users should consider standalone payroll software instead.
Xero Payroll Reviews
Xero has a 3.3/5 rating on Trustpilot from 300+ reviews – users praise the interface and accounting integration but criticise the lack of phone support.
Xero has a mixed reputation on Trustpilot with 58% five-star reviews but 21% one-star reviews. Praise focuses on the intuitive interface and tight accounting integration. Criticism centres on customer support response times.
Positive: “I have been a Xero user for many years. It just keeps getting better and is the best product on the market for my practice and my clients.” – Jane Van Tonder, Trustpilot
Critical: “Xero have almost non-existent customer service.” – Emily, Trustpilot
The support criticism matters. Xero offers online support only, with no phone line. If responsive phone support is important to you, Sage Payroll offers UK-based phone support as standard.
Xero Payroll vs Alternatives
Xero Payroll is cheapest per employee but requires an accounting plan. Sage is cheaper standalone, and Moneysoft is the cheapest overall at £95/year.
| Provider | Type | Price | Best For |
|---|---|---|---|
| Xero Payroll | Cloud add-on | £1.50/emp/month + plan | Existing Xero accounting users |
| Sage Payroll | Cloud standalone | From £10/month | SMEs wanting standalone cloud payroll |
| Moneysoft | Desktop (Windows) | From £95/year + VAT | Budget-conscious, Windows users |
| Staffology | Cloud | From £43/month | API-first modern cloud payroll |
| Outsourced bureau | Managed service | £4–£12/emp/month | Hands-off payroll management |
Annual cost comparison for 10 employees:
- Moneysoft: £95/year (cheapest overall)
- Sage Payroll: £240/year (cheapest standalone cloud)
- Xero Payroll: £372/year (cheapest per-employee, but requires accounting plan)
- Staffology: £516/year
Xero Payroll only makes financial sense if you already use (or plan to use) Xero for accounting. If you do not need Xero accounting, Sage Payroll at £20/month is a better standalone option.
Who Should Use Xero Payroll?
Xero Payroll suits some businesses far better than others. It is a strong fit if you already run your accounts in Xero, or plan to. Payroll then posts straight into your books with no re-keying. It also works well for small teams that want predictable per-employee pricing rather than tiered bundles. Staff can view payslips and request leave themselves through the Xero Me app, and online self-service support may be all you need.
Look elsewhere if you do not use Xero for accounting. A standalone tool like Sage Payroll or Moneysoft will cost less. The same goes if you run construction payroll and need CIS built in, rather than bolted on as a paid add-on. It is also the wrong fit if you want UK phone support close to a payroll deadline, or if you run a large or fast-growing workforce that may outgrow a lightweight built-in module.
For most existing Xero users with straightforward UK payroll, the add-on is the simplest and best-value way to pay staff. For everyone else, weigh it against the dedicated tools in our best payroll software guide before committing.
How to Contact Xero
Contact Xero via their online support centre, by email at [email protected], or through in-app support. Xero does not offer phone support.
- Support centre: central.xero.com
- Sales: [email protected]
- Support: [email protected]
- London office: 1 Bedford Avenue, London, WC1B 3AU
- Milton Keynes office: 500 Avebury Boulevard, Milton Keynes, MK9 2BE
Our Verdict
Xero Payroll scores 6.8/10 – excellent integration and competitive per-employee pricing, but the requirement for an accounting plan and lack of phone support limit its appeal.
Xero Payroll is the best payroll option for businesses already using Xero for accounting. The integration removes double data entry. Per-employee pricing is competitive, and the Xero Me app gives employees self-service access to payslips and leave.
However, it is not the right choice for everyone. If you do not use Xero accounting, the mandatory subscription (from £16/month) makes standalone alternatives like Sage Payroll or Moneysoft more cost-effective. Its focus on smaller teams, and the lack of built-in CIS (without an extra add-on), also limit its suitability for larger or construction-focused businesses needing dedicated CIS payroll.
For a full comparison of UK payroll options, see our best payroll software roundup, our cheap payroll software guide, or our payroll costs breakdown.
Best payroll choice for Xero users, but not standalone - alternatives are cheaper without accounting plan
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