How Outsourced Payroll Works for UK Small Businesses

Outsourcing payroll is one of the cleanest decisions a small business owner can make. Here's exactly how a UK payroll bureau works.

What an outsourced payroll bureau does

A payroll bureau handles every aspect of paying your employees on your behalf — gross-to-net calculations, tax codes, NI, student loan deductions, pensions, statutory pay, RTI submissions to HMRC, online payslips and year-end P60s.

RTI submissions — the bit that catches small businesses out

Since 2013, every UK employer has had to file a Full Payment Submission with HMRC on or before every pay date. Late or missing submissions trigger automatic penalties. A payroll bureau handles this automatically.

Auto-enrolment pensions

If you have employees aged 22+ earning over £10,000, you have to enrol them in a workplace pension — scheme setup, employee assessment at every pay run, contribution calculations, submissions to your provider, and re-enrolment every three years. All handled.

CIS payroll for construction businesses

For construction businesses, a payroll bureau handles subcontractor verification, deduction rates (0%, 20% or 30%), monthly CIS returns and statements of payment.

What outsourced payroll costs in the UK

1–5 employees: £25–£40/month. 6–20: £50–£100/month. 21–50: £100–£250/month. Pension administration usually included; CIS sometimes is.

Switching from your current payroll provider

The mid-tax-year switch is fine — it's the most common time people move providers. A good bureau will import employee records, year-to-date figures, link with HMRC, run a parallel test, then take over from the next pay period.

What to look for in a UK payroll bureau

Fixed monthly fee, RTI included, online payslip portal, full pension auto-enrolment handling, CIS support if needed, multi-frequency support, and a real human to call.