The best payroll software in the UK for your first employee

Taking on your first employee is a big step for any sole trader or landlord. Alongside the contract and the training, you become an employer in HMRC's eyes. That means running payroll: working out pay, tax and National Insurance, giving payslips, and reporting it all to HMRC. Good payroll software does most of this for you.

This guide is for small employers, such as a plumber hiring an apprentice or a landlord taking on a part-time property manager. We compared six well-known options, from HMRC's free tool to payroll inside Xero and QuickBooks, and checked prices in October 2026.

The best payroll software in the UK at a glance

Prices exclude VAT unless stated and were checked on each provider's website in October 2026. Introductory offers change often, so always confirm the live price. App ratings are from the UK App Store and Google Play in October 2026.

The cards below are built for our MTD reviews, so they show "n/a" for MTD and landlord features. Payroll is a separate job from MTD for Income Tax.

The best payroll software in detail

Sage Payroll is cloud payroll (it runs in your web browser) from one of the biggest names in UK accounting. It starts at £12 a month ex VAT for up to 5 employees, which covers most first-time employers. Introductory discounts often run, so check the live price.

Watch out for: it's a monthly cost even in months when payroll is simple. If you only have one employee and a tight budget, the free options below may be enough.

BrightPay is well regarded for its features and support. Its desktop version for 2025 to 2026 was free for up to 3 employees, then £139 a year for up to 10 and £209 for up to 25 (third-party figures). From 2026 to 2027, BrightPay is cloud only and priced using a calculator on its website. Check current pricing before you decide.

Watch out for: because of the move to cloud, older free and cheap prices may no longer apply. If you're a construction contractor, its CIS product, BrightCIS, is sold separately. BrightPay pays us nothing.

Moneysoft Payroll Manager is desktop software for Windows. It costs £95 a year ex VAT for up to 20 employees (PM20), £190 for up to 100 and £285 for up to 250. There's no per-employee fee within each band, and you can run payroll as often as you like.

Watch out for: it's Windows only, so it's not for Mac users or people who want to work from a phone. CIS is a separate product.

HMRC's Basic PAYE Tools is free for employers with fewer than 10 employees (GOV.UK). It works out tax and National Insurance and sends your reports to HMRC. For a sole trader with one part-time employee and a simple setup, it does the essential job at no cost.

Watch out for: it does not produce payslips, so you'll need another way to give them to employees. HMRC says it has limitations, and it doesn't handle CIS. It's desktop software only.

If you already use Xero for your bookkeeping, payroll is included on the Grow plan (£39 a month ex VAT) and above, with employee limits by plan. Pay runs flow straight into your accounts, which saves double entry. It also handles CIS. Read our Xero review.

Watch out for: payroll isn't on Xero Simple or Ignite, so upgrading just for payroll can cost more than a standalone tool. Check Xero for current employee limits.

QuickBooks Payroll is an add-on to QuickBooks Online, priced per month plus a fee per employee. Like Xero, its big advantage is that payroll and bookkeeping live together. It also supports CIS. Read our QuickBooks review.

Watch out for: it's an extra cost on top of your QuickBooks plan. Prices change often, so check the live price on the QuickBooks site. Not sure between the two? See Xero vs QuickBooks.

What does payroll involve for a first-time employer?

Reporting pay in real time (RTI)

RTI stands for Real Time Information. Each time you pay your employee, your payroll software sends HMRC the details of their pay and the tax and National Insurance you've taken off. You then pay those amounts to HMRC. This is why you need HMRC-recognised software (GOV.UK).

Workplace pensions (auto-enrolment)

In plain English, auto-enrolment means most employers must put eligible staff into a workplace pension automatically, and pay money into it alongside the employee. Whether a particular employee qualifies depends on their age and earnings. Most payroll software can work out who is eligible and calculate the amounts, but you still need to set up a pension scheme. If you're unsure, ask an accountant or the pension provider.

Payslips and records

Your employee needs a payslip each time they're paid. Most paid payroll software creates these. HMRC's Basic PAYE Tools does not, which is its main drawback.

Here's an illustration. Kerry runs a self-employed cleaning business and wants to hire one part-time cleaner. She uses FreeAgent for her own bookkeeping and MTD. For payroll, she could start with Basic PAYE Tools for free and make payslips separately, or pay £12 a month for Sage Payroll to have everything, including payslips, done in one place. See our best MTD software for cleaners for her own bookkeeping.

How to choose payroll software

1. Is it on HMRC's recognised list? This is non-negotiable.
2. Do you already use Xero or QuickBooks? Their payroll keeps everything together.
3. How many employees? Under 10 and very simple? Basic PAYE Tools may do. A few staff? Sage Payroll or Moneysoft.
4. Mac, Windows or browser? Moneysoft and Basic PAYE Tools are desktop software. Sage, Xero and QuickBooks run in your browser.
5. Do you pay subcontractors under CIS? Xero and QuickBooks handle CIS. BrightPay and Moneysoft sell it separately.

Still choosing software for your own books? See the best MTD software for sole traders.

Who should not buy payroll software?

If you're not sure whether someone is an employee or self-employed, check with HMRC or an accountant before you start.

How we chose these

We shortlisted well-known UK payroll products that suit small employers, including HMRC's own free tool. We scored them on price, free options, ease of use, CIS support and how well they fit with bookkeeping software, based on our review of features, pricing and user ratings. Affiliate commission plays no part. BrightPay, Moneysoft and Basic PAYE Tools pay us nothing. Read how we test.