Cost comparison · UK small businesses

Running payroll yourself vs outsourcing it: the honest maths

Plenty of small employers run their own payroll, and some genuinely should. Here's what DIY actually costs in hours, software and risk, and an honest view of when each side wins.

Every pay period	And alongside it
Collect hours/changes · calculate gross-to-net (tax codes, NI, student loans) · produce payslips · file the FPS with HMRC on or before payday · submit pension contributions · pay HMRC by the 22nd	Starters & leavers (P45s) · statutory sick/parental pay when it happens · tax-code notices · year-end P60s · keeping up when rates and thresholds change every April, and sometimes mid-year

Every pay period

And alongside it

Collect hours/changes · calculate gross-to-net (tax codes, NI, student loans) · produce payslips · file the FPS with HMRC on or before payday · submit pension contributions · pay HMRC by the 22nd

Starters & leavers (P45s) · statutory sick/parental pay when it happens · tax-code notices · year-end P60s · keeping up when rates and thresholds change every April, and sometimes mid-year

	DIY	Outsourced to us
Cash cost / month	£0 to £30 (HMRC's free Basic PAYE Tools, for employers with fewer than 10 employees, works out tax and NI and files with HMRC, so check what else it covers before relying on it; paid software with payslips and pension features costs £10 to £30)	£55 + £7/payslip = £90 (5 staff, monthly)
Your time / month	2 to 5 hours of the owner's or a senior person's time	~10 minutes: send changes, approve the run
Who meets the deadline	You, every payday, every month, on holiday or not	We take on the work of meeting it, filing on or before payday. The legal duty and any HMRC penalty stay with you as the employer
If it goes wrong	Late FPS penalties run from £100/month for 1 to 9 employees up to £400 for 250 or more, though the first late month in each tax year isn't penalised; pension and tax-code errors compound quietly	Checked twice, filed once, and a specialist to fix anything fast
The real comparison	If your time is worth even £30/hour, DIY's "saving" costs £60 to £150/month in attention, before any penalty, and before the April scramble

DIY

Outsourced to us

Cash cost / month

£0 to £30 (HMRC's free Basic PAYE Tools, for employers with fewer than 10 employees, works out tax and NI and files with HMRC, so check what else it covers before relying on it; paid software with payslips and pension features costs £10 to £30)

£55 + £7/payslip = £90 (5 staff, monthly)

Your time / month

2 to 5 hours of the owner's or a senior person's time

~10 minutes: send changes, approve the run

Who meets the deadline

You, every payday, every month, on holiday or not

We take on the work of meeting it, filing on or before payday. The legal duty and any HMRC penalty stay with you as the employer

If it goes wrong

Late FPS penalties run from £100/month for 1 to 9 employees up to £400 for 250 or more, though the first late month in each tax year isn't penalised; pension and tax-code errors compound quietly

Checked twice, filed once, and a specialist to fix anything fast

The real comparison

If your time is worth even £30/hour, DIY's "saving" costs £60 to £150/month in attention, before any penalty, and before the April scramble

What payroll software doesn't do for you

Modern payroll software is good. It works out tax and National Insurance, produces payslips and sends the FPS to HMRC. What it can't do is make the calls. It applies the rules to the facts you give it, and if those facts are wrong it files the wrong answer, correctly calculated and on time. These are the judgements it hands back to you.

Employment status. Software pays whoever you add. It won't ask whether the freelancer you've paid every month for a year is really self-employed. Employed or self-employed? walks through the test.

Tax code notices. It applies the code you enter. When HMRC sends a new one, somebody has to spot it and apply it from the right pay run. What a P6 notice is explains how they arrive.

Statutory pay. Enter a sickness absence or a maternity start date and it works out the figure. Whether the employee qualifies, and what evidence and notice you need, is still your question.

Pension duties. Most packages assess staff for auto-enrolment. Acting on it is still on you: the letters, the opt-out window, and putting staff back in when re-enrolment comes round every three years.

Corrections. It tells you whether a submission was accepted. It won't tell you how to put right an earlier pay run that was wrong. If HMRC's letter has already arrived, when HMRC says you owe PAYE you've already paid is a good place to start.

None of that makes software the wrong choice. It means the real question is who makes those calls, and whether that's the best use of your time.

Sometimes DIY genuinely is the right call.

We'd rather tell you that than win a client who shouldn't have switched. If the panel opposite describes you, modern payroll software is good, and you'll likely be fine running it yourself, come back when the team grows.

If it doesn't describe you, the question isn't really "can I do payroll?", it's "is payroll the best use of the hours?"

Get the hours back.

Tell us your headcount and we'll quote a fixed monthly fee, usually less than the time DIY was quietly costing you.

Get my fixed quote

✓ Questions answered, no sales pitch✓ Fixed fees, published✓ No lock-in on payroll✓ £250 off setup on a DPNI, a DCNI, an NI-only or a tax-only scheme, if you go ahead quickly

Running payroll yourself vs outsourcing it: the honest maths

The job behind "it's just a few payslips"

A 5-person team, compared honestly

What payroll software doesn't do for you

Sometimes DIY genuinely is the right call.

DIY makes sense when…

Get the hours back.