Payroll bureau vs payroll software vs doing it yourself

You have three ways to run payroll: do it yourself with HMRC’s free Basic PAYE Tools, do it yourself with paid payroll software, or pay a bureau or accountant to do it for you. Whichever you pick, GOV.UK is clear that “as an employer, you’re legally responsible for completing all PAYE tasks”. The right choice depends on your headcount, your time and how complex your pay is.

What are the three options?

GOV.UK’s choose how to run payroll page gives two routes: run it yourself with payroll software, or pay a payroll provider such as a bureau or accountant. Running it yourself splits into two in practice, free HMRC software or a commercial product.

Option 1: HMRC’s Basic PAYE Tools

Basic PAYE Tools is free software from HMRC for employers with fewer than 10 employees. It calculates tax and National Insurance and sends the reports to HMRC. You need to be registered as an employer and have a PAYE Online login.

HMRC says it has limitations and is not designed for agents or bookkeepers. Its page does not say it produces payslips or handles pension deductions, so plan for those separately. It runs on 64-bit Windows 10 and 11, macOS 15 and 26, and Ubuntu Linux 24.04 and 25.10. HMRC warns not to uninstall an old version, or you will lose payroll data.

Option 2: paid payroll software

Commercial payroll software is the usual choice once you outgrow Basic PAYE Tools. GOV.UK’s payroll software page says it must report PAYE information online and should help you:

• record employee details
• calculate pay and deductions
• report payroll information to HMRC
• work out what you owe HMRC
• calculate statutory pay, such as maternity or sick pay

GOV.UK also says to check for payslips, pension deductions and payments, and paying people on different schedules, because some software lacks them. Choose from HMRC’s list of recognised software; HMRC does not recommend one product over another. Many cloud accounting packages include payroll or sell it as an add-on. See our payroll software hub.

Option 3: a payroll bureau or accountant

A bureau or accountant runs the payroll for you. GOV.UK says some providers also keep employee records, provide payslips and pay HMRC on your behalf. You still have to collect and keep your employees’ details, because your provider needs them.

Outsourcing moves the work, not the liability. If your provider files late or gets a figure wrong, HMRC’s penalty is charged to you. Ask any provider how they handle errors and whether their engagement letter covers the cost of their mistakes.

What does each option leave you doing?

Every employer has the same monthly duties under GOV.UK’s running payroll guidance. The question is who does each one.

1. Record each employee’s pay and calculate deductions.
2. Produce payslips.
3. Send a Full Payment Submission (FPS) on or before payday.
4. Send an Employer Payment Summary by the 19th if you need to claim reductions or paid nobody.
5. Pay HMRC by the 22nd electronically, or the 19th by post.
6. Deduct and pay workplace pension contributions.

With Basic PAYE Tools you do all six, with payslips and pensions outside the tool. With paid software you do all six, but the software handles more of each. With a bureau you supply the data and approve the run; the provider does the rest.

What does getting it wrong cost?

Late filing penalties are the main risk, and they fall on the employer. HMRC’s penalty guidance sets monthly amounts by headcount.

No penalty applies if a late FPS reports all payments within 3 days of payday, though HMRC may still contact employers who do this often. Your first late report in a tax year is not penalised, and new employers have 30 days from first paying someone. HMRC’s guidance was last updated on 11 July 2019.

Which applies to you?

• If you have fewer than 10 staff on fixed salaries, Basic PAYE Tools may be enough, with a separate payslip and pension process.
• If you run auto-enrolment pensions or hourly pay, paid software saves manual work. See workplace pension auto-enrolment.
• If you already use cloud accounting, check whether payroll is an add-on to your plan.
• If nobody in the business has time or payroll knowledge, a bureau or your accountant removes the routine work.
• If you are a director paying only yourself, ask your accountant, who may run it with your year-end work.

Prices vary by headcount and pay frequency, so get written quotes. Our guide to how much a bookkeeper costs covers outsourced fees.

What to do now

1. Count your employees and pay frequencies.
2. List the extras you need: payslips, pensions, statutory pay, multiple schedules.
3. If you are new, set up PAYE and register as an employer first.
4. Run one sample payslip by hand using our payroll taxes example, then check any software or provider against it.

Frequently asked questions

Is HMRC’s payroll software free?

Yes. Basic PAYE Tools is free for employers with fewer than 10 employees who are registered with HMRC and have a PAYE Online login.

Am I still responsible if a bureau runs my payroll?

Yes. GOV.UK says employers are legally responsible for all PAYE tasks even if they pay someone else to do them.

What is the penalty for a late FPS?

Between £100 and £400 a month depending on headcount. No penalty applies if the late FPS is within 3 days of payday, and the first late report each tax year is not penalised.

Does HMRC recommend any payroll software?

No. HMRC lists recognised software but says it cannot recommend one product over another.

Can my accountant run payroll for me?

Yes. GOV.UK names a bureau or an accountant as examples of payroll providers who can run payroll for you.