HOW TO HIRE · BUSINESS & PROFESSIONAL · CHECKED OCTOBER 2026
How to hire payroll service in the UK
The checks, the questions and the paperwork.
Payroll needs no licence, but your employer duties stay with you and bureaux must register with HMRC. Here are the checks.
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THE 60-SECOND VERSION
Hiring payroll service in five steps
- Register as an employer firstBefore the first payday, so you have a PAYE reference.
- Check the bureau's HMRC registrationPayroll-only providers must register for an agent services account from 18 November 2026.
- Confirm pension duties are coveredAuto-enrolment assessments, contributions and declarations.
- Agree how changes reach the bureauStarters, leavers, pay rises and sickness, with a cut-off date each month.
- Check data securityPayroll records hold bank details and National Insurance numbers.
BEFORE YOU BOOK
Check before you book
No register applies
No licence is required to run payroll for others in any UK nation. The legal duties are HMRC registration for providers dealing with HMRC, anti-money-laundering supervision for accountancy firms, and data protection.
Ask the payroll service which body, if any, supervises it and how long it has run payrolls of your size. gov.uk →
HMRC tax adviser registration for payroll providers
According to HMRC, a business that runs payroll for other employers counts as a tax adviser and must hold an agent services account from 18 November 2026.
Ask whether the bureau has, or is applying for, an agent services account. gov.uk →
Your PAYE reporting duty
As an employer operating PAYE you must report pay and deductions to HMRC through payroll on or before each payday. Using a payroll service does not move the duty off you.
Ask for a copy of each submission confirmation. gov.uk →
Workplace pension duties
Under the workplace pension rules every employer must offer a scheme to eligible staff from their duties start date and enrol those who meet the age and earnings tests; the payroll service only carries out the steps for you.
Check the payroll service assesses staff and sends contributions every pay period. gov.uk →
VAT
Payroll bureau services are standard-rated, so a registered payroll provider adds 20% to the price per employee per pay run and to extras such as holiday calculations. Registration becomes compulsory once a payroll provider has VAT-taxable turnover over £90,000 in any rolling 12 months; from then VAT must be charged and shown as a separate line on the invoice.
Ask the payroll provider for the VAT number with the agreement and for the per-payslip fee and VAT shown apart. gov.uk →
A good answer: An agent services account, or registration by 18 November 2026.
A good answer: Payslips, submissions to HMRC, pensions, starters and leavers, year-end forms.
A good answer: Assessment, enrolment, contributions and the declaration of compliance.
A good answer: A date and a simple way to send changes.
A good answer: Encryption, access controls and where data is stored.
A good answer: Who fixes it and who pays any penalty caused by the bureau.
A good answer: A stated minimum for small teams.
Getting the quote right
- Price per employee per pay run, and pay frequency
- Who actually attends to your pay runs: the payroll provider's employed staff, or a subcontracted bureau
- Minimum monthly fee
- Pensions, starters, leavers and year-end included
- Extras: director payroll, expenses, holiday calculations
- Data security and who corrects errors
- The VAT number, and VAT at 20% on the per-payslip fee and the minimum monthly fee
Walk away if
- No plan to register with HMRC
- Pension contributions left to you without saying so
- Payslips sent by unsecured email
- No error correction terms
- Changes accepted by phone only
- No submission confirmations
What payroll service costs: £4–£12 per employee
Payroll services usually charge per employee per pay run, often with a monthly minimum. Payroll Service price guide →
Guide prices compiled by the Locufy team from published Irish and UK provider price lists and 2026/27 cost guides. Updated 2026.
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- SetupEmployer registration, staff details and pension scheme connected.
- ChangesStarters, leavers and pay changes sent by the cut-off.
- Pay runPay, tax, National Insurance and deductions calculated.
- ReportingPayroll reported to HMRC on or before payday; pension contributions sent.
- Year endP60s issued and records closed.
- PAYE
- Pay As You Earn: the system for deducting tax from wages.
- FPS
- Full Payment Submission: the report sent to HMRC each payday.
- Auto-enrolment
- Putting eligible staff into a workplace pension automatically.
- P60
- The end-of-year summary of pay and tax given to each employee.
- Payroll bureau
- A firm that runs payroll for other businesses.
- Duties start date
- When an employer's pension duties begin.
AFTER
When the job is done
Hiring payroll service: questions people ask
Yes: HMRC says third-party payroll providers will need to register as tax advisers from 18 November 2026.
Yes. You remain the employer, responsible for PAYE reporting and workplace pension duties.
No licence is needed, but HMRC registration and data protection rules apply.
Roughly £4–£12 per employee, typically £8. Headcount, pay frequency, pensions and minimum fees for small teams set the price. The payroll service price guide shows what sits behind each figure; type your town above to find payroll bureaux in your area.
Enrolling eligible staff into a workplace pension and paying employer contributions.
A few days; then each pay run is handled to your pay date.
MORE GUIDES
More hiring guides in business & professional
Payroll bureaux near you
Sources — checked October 2026
- gov.uk — check if and when you need to register as a tax adviser with HMRC
- gov.uk — running payroll
- gov.uk — workplace pensions for employers
- gov.uk — Money Laundering Regulations: who needs to register
- Consumer Rights Act 2015, section 49 — reasonable care and skill
- Citizens Advice — more help with a consumer issue
- gov.uk — make a court claim for money: court fees
- VAT rates — VAT rates for goods and services: standard rate 20% on most goods and services
- GOV.UK — Register for VAT: when to register
