Payroll is the one piece of business software where cheap and compliant are not in tension, because the compliance obligations are identical whatever you pay. Every product here submits Real Time Information to HMRC on or before payday and handles pension auto enrolment, so a small employer paying nothing is not filing a worse return than one paying thirty pounds a month.
What separates them is the shape of the pricing rather than the quality of the filing. We have ranked these on the real cost at a realistic headcount excluding VAT, because a headline that includes five employees tells you very little once you employ twelve, and a free tier with a hard cap tells you even less.
How to compare cheap payroll properly
Work out the real per person cost before anything else. Payroll pricing almost always combines a base fee with an included headcount and then a charge for each additional employee, and those three numbers interact in ways that make the advertised figure close to meaningless. A plan at twelve pounds including five employees, with an extra two pounds each after that, costs twenty six pounds at twelve staff, which puts it above a rival advertising a higher base with more employees included. Build the calculation for your actual headcount and for where you expect to be in a year, then compare those totals rather than the prices on the website.
Then check what the cheap tier gives up, because something is always traded. The common restrictions are a hard employee cap, no pension auto enrolment assessment, no employee self service portal, limited or community only support, and no journal posting into your accounting software. Of those, auto enrolment is the one to refuse to compromise on, since assessing staff every pay period is a legal duty and doing it by hand is exactly the sort of task that produces a penalty. Support is the second: free payroll with no one to call is fine until the first time a submission is rejected two days before payday. And do weigh whether payroll should simply live inside the accounting software you already pay for, because the built in option is often the cheapest realistic answer once you count the reconciliation time it saves.
How we assessed these tools
Every product here was judged on the things that actually decide whether software works for a UK business: the real published price excluding VAT, how it handles HMRC obligations such as Making Tax Digital, RTI or CIS where relevant, the depth of the core job it is bought for, how quickly a non specialist can get productive, and the quality of UK support. We read each vendor's own pricing pages rather than repeating third party figures, and we weight verified user ratings from people who run these tools day to day.
We also try to be honest about fit rather than crowning a single winner, because the right tool for a ten person business is rarely the right tool for a two hundred person one. Each entry below carries its real starting price, its current Assaylist rating and a clear note on who it suits and where it falls short, so you can match the software to your own situation rather than to an average. Where we earn a commission from an outbound link we say so, and it never changes the order of this list.
The best options ranked
1. Shape Payroll
Shape Payroll is the strongest genuinely free option for a UK small employer, and it does not achieve that by cutting the compliance corners that matter. RTI submission and auto enrolment are both there, and the interface is noticeably cleaner than you would expect at the price, which is to say none.
What you get: A straightforward UK cloud payroll product with a free Basic tier and a low cost Pro plan, aimed at small employers who want RTI and auto enrolment without complexity. It holds a 4.2 out of 5 rating across 250 reviews on Assaylist.
Pricing: The plans run Basic at free and Pro at £5 per month, excluding VAT.
Why we rate it:
- Genuinely free Basic tier
- Simple and quick to run
- Very low cost Pro plan
- UK cloud payroll with auto updates
Bear in mind: it is a smaller vendor than the household names, so weigh that against the saving if payroll is business critical for you.
Read our full Shape Payroll review →
2. Xero Payroll
Xero Payroll is priced per employee as an addition to a Xero subscription, which makes it close to the cheapest credible option for any business already running Xero. The payroll journal posts straight into the ledger, which quietly removes a monthly reconciliation and a common source of error.
What you get: Xero's UK payroll, included with the Grow plan and above and priced per person on Ignite. Auto enrolment, RTI and employee self service in the same system as the ledger. It holds a 4.1 out of 5 rating across 225 reviews on Assaylist.
Pricing: The plans run On the Ignite plan at £1.5, Included with Grow at free, Included with Comprehensive at free and Included with Ultimate at free per user per month, excluding VAT.
Why we rate it:
- Posts the payroll journal automatically
- Auto enrolment assessment built in
- Employee self service app
- Shares one audit trail with the ledger
Bear in mind: it is only worth this price as an addition to a Xero subscription, so it is not a standalone saving.
Read our full Xero Payroll review →
3. Employment Hero
Employment Hero bundles payroll with HR, onboarding and employee records at a price that undercuts most payroll only products, and there is a free entry point for the smallest employers. For a business that needs both HR and payroll but can only justify one subscription, that combination is hard to beat on cost.
What you get: An Australian built platform that has grown fast in the UK, bundling HR, payroll and employee benefits. Notable for a free payroll option and per employee pricing. It holds a 4.1 out of 5 rating across 273 reviews on Assaylist.
Pricing: The plans run Free Payroll at free, Core Payroll at £3, HR Essentials at £4 and HR Engage at £7 per user per month, excluding VAT.
Why we rate it:
- Genuinely free payroll tier
- HR, payroll and benefits in one
- Well built employee app
- Per employee pricing that starts low
Bear in mind: the breadth means it is good at many things rather than best at any single one, payroll included.
Read our full Employment Hero review →
4. Onfolk
Onfolk is a modern British payroll and HR product priced well below the established names, and it feels like software built this decade rather than adapted from something older. For a growing team that wants payroll and people data together without paying platform prices, it is a genuine value pick.
What you get: A newer UK platform combining payroll and HR in one place, aimed at scaling companies that want both handled together with heavy automation and a clean interface. It holds a 3.9 out of 5 rating across 238 reviews on Assaylist.
Pricing: The plans run Onfolk at £5 per user per month, excluding VAT.
Why we rate it:
- Payroll and HR in one platform
- Heavy automation
- Modern, clean interface
- Posts to accounting automatically
Bear in mind: it is a newer product with a smaller UK footprint, so the ecosystem around it is thinner than the incumbents.
Read our full Onfolk review →
5. Sage Payroll
Sage Payroll is the option to choose if the person running payroll is a busy owner rather than a specialist, because its error checking catches the mistakes that cost real money before they are submitted. That safety net is worth paying a few pounds a month for, and it is still inexpensive by any reasonable measure.
What you get: Sage's cloud payroll for start ups and small businesses. Three tiers, five employees included on each, with pension auto enrolment and HMRC notices built in. It holds a 4.0 out of 5 rating across 266 reviews on Assaylist.
Pricing: The plans run Payroll Essentials at £12, Payroll Standard at £23 and Payroll Premium at £34 per month, excluding VAT.
Why we rate it:
- Pension auto enrolment built in
- Payroll anomaly detection
- Automated HMRC notices
- HR features at every tier
Bear in mind: the included headcount means the real cost climbs faster than the headline suggests once you pass it.
Read our full Sage Payroll review →Comparison at a glance
Here is how the shortlist compares on what it is best for, the starting price excluding VAT and the current Assaylist rating.
| Software | Best for | Starting price | Rating |
|---|---|---|---|
| Shape Payroll | Best free option | From £0 / month | 4.2 |
| Xero Payroll | Cheapest if you use Xero | From £1.50 per user / month | 4.1 |
| Employment Hero | Best free all in one | From £3 per user / month | 4.1 |
| Onfolk | Best low cost modern option | From £5 per user / month | 3.9 |
| Sage Payroll | Most forgiving cheap option | From £12 / month | 4.0 |
How much should you budget?
A UK small employer can run compliant payroll for nothing. Shape Payroll is free, Employment Hero has a free entry point, and both file RTI and handle auto enrolment properly. If you already pay for Xero, adding payroll at a small per employee rate is close to the cheapest credible route and buys you automatic journal posting into your ledger, which is worth more than the difference to most businesses.
Paid standalone payroll for a small employer generally runs from about five to thirty pounds a month excluding VAT, typically with a handful of employees included and roughly one to two pounds for each person beyond that. The number to budget on is your total at your real headcount rather than the advertised base, and it is worth calculating it at the size you expect to be next year too, because the crossover between two pricing models often sits only a few employees away from where you are now.
Our verdict
If cost is the only consideration, Shape Payroll is the best genuinely free UK payroll and does not cut the compliance corners that matter, with Employment Hero the alternative for a business that wants HR bundled in at the same price of nothing. Neither is a compromise on RTI or auto enrolment, which is what would actually make a cheap product expensive.
If you already run Xero, adding Xero Payroll is almost certainly the cheapest sensible answer once you count the reconciliation time the automatic journal saves. Onfolk is the modern low cost pick for a growing team, and Sage Payroll is worth its small premium for anyone whose payroll is run by an owner rather than a specialist, because its checking catches the errors that cost far more than the subscription.
The bottom line
Cheap payroll is not risky payroll in the United Kingdom, because RTI and auto enrolment obligations are identical at every price point and the free products meet them. Start by asking whether payroll should live inside accounting software you already pay for, since that is usually the cheapest real answer. If not, Shape Payroll and Employment Hero both cost nothing and do the job properly. Just build the cost at your actual headcount rather than the advertised one, and never trade away auto enrolment assessment to save a few pounds.
Frequently asked questions
Is there genuinely free payroll software in the UK?
Yes. Shape Payroll is free and Employment Hero has a free entry point, and both submit Real Time Information to HMRC and handle pension auto enrolment. The compliance obligations do not change with price, so a free product files the same submissions as an expensive one.
What is the cheapest payroll software for a small business?
Free options such as Shape Payroll cost nothing. If you already use Xero, adding Xero Payroll at a small per employee rate is usually the cheapest realistic route because it also posts the payroll journal into your ledger automatically. Paid standalone payroll starts at roughly five pounds a month excluding VAT.
Does cheap payroll software still handle auto enrolment?
The good ones do, and it is the feature you should refuse to trade away. Assessing staff for pension auto enrolment every pay period is a legal duty, and doing it manually is exactly the kind of task that produces a penalty. Confirm auto enrolment assessment is included before choosing any low cost product.
What do cheap payroll plans usually leave out?
The common restrictions are a hard employee cap, no employee self service portal, limited or community only support, and no journal posting into accounting software. Auto enrolment and support are the two worth paying to keep, because a rejected submission two days before payday is not a moment to be without someone to call.
Should payroll be part of my accounting software?
Often, yes. Payroll built into the accounting software you already pay for posts the journal automatically, which removes a monthly reconciliation and a frequent source of error. For many small businesses the built in option works out cheapest overall once that saved time is counted, even where the subscription is not the lowest on paper.
Prices were checked against each vendor's UK pricing on 7 August 2026 and exclude VAT unless stated. Vendors change pricing, so confirm the current figure on the vendor's own site before you buy. Some links are commercial; where we earn a commission it never affects our ratings or the order of this list.
