The 5 Best Free Payroll Software Solutions

All businesses that process payroll in-house are required to use payroll software so they can send payroll reports to the HMRC  – so it’s not something you can skip! You can also outsource payroll to specialist payroll service, but unfortunately there’s no free option for payroll outsourcing.

When it comes to in-house payroll software, however, there are free solutions out there that have been approved by HMRC, including all the ones featured in this article.

The best free payroll software will save you time on admin and ensure you submit accurate reports on time. We can’t overstate how valuable this is, since mistakes and late submissions can result in HMRC fining you £100 to £400. So, without further ado, here are our top picks for free payroll software:

The Best Free Payroll Software: Summary

1. IRIS Payroll Basics: Best all-round free payroll software

IRIS Payroll Basics is a free, cloud-based payroll software that businesses with less than 10 employees can use to manage their payroll. Any legislation or business software updates are also included with the platform, free of charge.

However, like all free payroll software systems, IRIS Payroll has a pretty basic offering. It’s not suitable for handling complex payment requirements like pension-schemes, or international payrolls, and doesn’t accommodate third-party software integrations, but it’ll help you stay compliant with HMRC.

Here are its key features:

• Integrates with HMRC for automatic form submissions
• RTI and Automatic Enrolment-compliant
• Calculates PAYE, NI, and statutory payments
• Generates mandatory employee forms, payslips, and basic reports
• Can be scaled up as your business grows

Who’s IRIS Payroll Basics for?

We’d recommend IRIS Payroll Basics to micro businesses who are looking to scale, since IRIS makes it easy to upgrade to a more advanced software system that can handle more employees and complex tasks.

If it’s your first time dealing with payroll, IRIS has a good customer support network in place. You can contact the customer service team by phone, email, or live chat, and the IRIS website has a knowledge base and plenty of handy guides that answer a range of payroll-related questions.

2. Shape Payroll Lite: Best for ease of use

Shape Payroll’s Lite plan is designed for truly tiny businesses, only capable of processing payroll for three employees – most other free payrolls can handle up to 10.

The free plan includes all of Shape Payroll’s core features, such as generating payroll documents and payslips. You can easily set up and edit employee records and ensure that they’re on the correct tax code in the platform, and it’s HMRC compliant, allowing you to automate your payroll.

One thing that sets Shape Payroll Lite plan apart from other free payroll solutions is that it can calculate pension contributions (IRIS and HMRC’s Basic PAYE Tools don’t), although you’ll have to upgrade to a paid Shape Payroll plan to integrate your payroll with a pension scheme provider.

Customer support is also limited to the community support forum on the paid plan, so you’re a little stuck if you run into real trouble.

Here are its key features:

• Integrates with HMRC
• RTI and Automatic Enrolment-compliant
• Calculates PAYE and NICs
• Pension contributions calculator
• Generates payslips, P60s and P45s
• Can be scaled up as your business grows

Who’s Shape Payroll Lite for?

Shape Payroll Lite is best for micro-businesses, such as fresh-off-the-ground startups or small artisans, since it has a three-employee limit.

It can be easily scaled up, should you envision your team growing, since Shape Payroll has a plan for businesses with 50 employees, and a bespoke plan and managed payroll plan for larger businesses.

The free plan isn’t big on customer support, however, so if you’re feeling nervous about managing payroll, you should go with IRIS, which offers much more guidance.

3. Primo Payroll Essentials Free Plus: Best for auto-enrolment

Primo Payroll’s Essentials Free Plus plan’s highlight is its auto-enrolment capability. It automatically calculates pension contributions and eligibility, but unlike the other free solutions on this list, Primo’s free system can also communicate this directly with your pension provider.

The free version also comes with the basic features you’d expect, such as tax calculation, and payslip generation. Although unlike Shape, Primo lets you email payslip to employees on its free plan. With Shape you have to upgrade to a paid plan to do this.

Primo’s Essentials Free Plus does have some drawbacks. There’s a 10-employee limit that includes leavers. This means that if anyone leaves your company, you won’t be able to add their replacement to the payroll system if you’re already at the 10-person limit.

Support-wise, you’ll be limited to emails, which will be classified as low priority, so don’t expect swift replies.

Here are its key features:

• Integrates with HMRC
• RTI and Automatic Enrolment-compliant
• Calculates tax and NICs
• Email payslips to employees
• Can be scaled up as your business grows

Who’s Primo Payroll Essentials Free Plus for?

We’d recommend Primo Payroll’s free payroll software for businesses with 2 to 5 employees. Even though the employee limit is 10, since this includes leavers, starting out with fewer employees will give you more time before you have to upgrade to a paid plan.

Paid plans imply scalability, and rest assured, Primo has payroll solutions for businesses of all sizes, so you can stick with them once you outgrow the free version.

It’s an especially good option for automating the pension process, so if that’s a priority for you, this is the software for you.

4. EnrolPay Self Service: Best bare-bones solution

Given its name, it’s pretty evident that EnrolPay’s free Self Service payroll software is a low-touch solution.

The platform is quite barebones, but that’s what makes it easy to use. You’ll be able to generate printable employee payslips, P45s, and P60s, and create employer records (SSP, SMP, SAP etc.).

However, the platform won’t automatically submit RTIs to HMRC for, you’ll have to do this manually from the platform each month – IRIS automates this process. There’s also a nine-employee limit, one person short of almost every other supplier on this list.

You also won’t get auto-enrolment on EnrolPay’s free version, it’s actually an add-on for all of EnrolPay’s “Self Service” payroll systems.

Here are its key features:

• Integrates with HMRC
• Manual RTI submission
• Calculates PAYE and NICs
• Printable payslips, P45s, and P60s
• Can be scaled up as your business grows

Who’s EnrolPay Self Service for?

The self-service aspect of EnrolPay might not be everyone’s cup of tea, but if you want to save your coins and don’t mind the manual tasks, this could be the right platform for you. You also don’t need to be a tech expert to use the platform, as it’s very simple.

Customer support, however, is limited to the FAQ Library (no phone or email), so we’d recommend IRIS if you’re worried about being stuck in a bind.

5. HMRC Basic PAYE Tools: Best for checking employee’s NI number

HMRC actually provides its own free payroll software to businesses, called Basic PAYE Tools. Like IRIS Basic Payroll, it’s limited to businesses with fewer than 10 employees, and can only complete basic payroll functions such as calculating PAYE and NI contributions.

Since it is government owned, this software allows you to check a new employee’s NI number, send an Employment Payment Summary and send an Earlier Year Update directly to HMRC from the platform. It also has an apprenticeship Levy calculator, although since this is a tax only paid by large companies with a pay bill of over £3 million, it’s essentially a useful feature for software that only manages payroll for businesses of 10 employees or less.

However, BPT does not allow for auto-enrolment, it can’t produce payslips, or calculate pension contributions. It also can’t be scaled up if your number of employees increases past 10 since HMRC does not offer any other type of payroll software system.

Here are its key features:

• Employee NI number lookup
• Calculates PAYE and NICs
• Apprenticeship Levy calculator 
• Sends data directly to HMRC

Who’s HMRC Basic PAYE Tools for?

HMRC Basic PAYE Tools is a good option for businesses who feel safer using government made payroll tools over privately made ones, and aren’t planning on increasing their number of employees.

It’s not a good option for businesses looking to grow, as HMRC doesn’t have an alternative software for larger companies.

We also wouldn’t recommend BPT to employers who are unfamiliar with how payroll works, since even though this is a government-made payroll tool, there’s very little hand holding involved in it. HMRC does have a user guide, which it updates regularly, but it’s not easily digestible for total beginners.

Is Free Payroll Software Worth it?

Free software gives small businesses the ability to run payroll without any overhead fees. This is extremely helpful at the beginning stages of a business, when you might not have the funds to invest in advanced software, but still need to submit reports to HMRC.

However, there are limitations with free software, the biggest being the typical 10-employee limit. Free payroll software is also limited when it comes to its features, typically only offering HMRC form submission, tax calculation, and payslip generation.

Paid payroll software allows you to managed payroll for a larger number of employees, and provides automation, comprehensive reporting, and employee portals. These features take away the effort and stress of manual tasks and ensure you stay compliant. Your employees are able to access their own portal and request holiday, check payslips and update their personal details.

Read more on payroll compliance in our guide.

If you plan on growing your business, we recommend that you choose a provider that allows you to scaled up from its free plan to a paid plan. As your business grows, you’ll find that it’s no longer sustainable to manually carry out payroll tasks, and that you have too many employees to qualify for free software.

Why Do Companies Offer Free Payroll Software?

Most private companies that offer free payroll software do so in the hopes that your business will outgrow the free plan and upgrade to  one of their paid options. That’s why the number of employee you can manage with free payroll software is typically very limited.

Some companies offer other services besides payroll software, such as accounting software, and so make a profit through other means.

The exception to this is HMRC’s Basic PAYE Tools software. Since it’s a government-made software, it’s free to use, and subsidized by taxes (so technically, we’re all paying for it).

How Much Does Payroll Software Typically Cost?

Paid payroll software typically costs around £10-£30 per month for basic services suitable for a small business with around 15 employees. That’s around £1.30 per month, per employee, or £240 per financial year. A business with up to 50 employees can expect to pay around £50-£80 per month, while anything above that costs £100-£200 per month.

You also have the option of outsourcing payroll to a payroll service provider, a separate company that can manage your payroll for you.

Paid payroll services costs vary depending on if you choose a fully managed or part-managed solution. A fully managed service tends to cost around £4–£25 per employee, per month, and pension plan auto-enrolment costs around £1.50–£2 per employee, per month. If you want HR tools, this will cost you £10–£25 per employee, per month.

Part-managed payroll services are harder to price, as this cost depends on which services you want to outsource. You can expect to pay around £2–£3 per employee, per month.

If you want help deciding whether outsourcing is a good option for your business, check out our article on the benefits of outsourcing payroll.