How London payroll bureaus and in-house software compare on cost and compliance

What to take away

What a London payroll bureau actually does for an employer

A bureau takes your employee data, runs the calculations and files to HMRC under Real Time Information.

Day to day that covers gross to net calculations, PAYE and National Insurance deductions, statutory payments, pension deductions and the Full Payment Submission. Most London bureaus also handle P45s, P60s and starter declarations.

Outsourcing usually adds year-end processing, P11D support and liaison with HMRC when a query lands. Some bureaus run auto-enrolment assessments and upload contributions to The Pensions Regulator-compliant schemes.

In London the work skews complex. Multi-entity groups, share schemes, foreign nationals and monthly bonus cycles are routine. A bureau that only handles single-company, salaried payrolls will struggle with a Mayfair holding company running six payrolls.

Pricing models vary. Some charge per payslip, some per month per client, some a retainer plus transaction fees. The pricing models used across England reward you for stable headcount and penalise constant churn.

Typical London bureau quotes sit at about £4 to £10 per payslip, or a monthly retainer from about £100 for a small payroll, with both rising with headcount and entities.

A bureau also absorbs the software licence, the BACS submission and the HMRC recognition checks. That is the appeal: one invoice instead of a stack of them.

Running payroll in-house with software: the real cost lines

In-house payroll software is a licence or subscription plus your own labour. The licence looks cheap next to a bureau quote. The labour is where the money goes.

Budget for these lines.

A part-time payroll administrator in London costs materially more than the same role outside the capital. Salary expectations follow local market rates, and ONS earnings and working hours data is the sensible benchmark when you build the case.

Software alone does not process payroll. Someone reconciles the gross to net report, checks the variance against last month and approves the BACS file. If that person is your finance director, you have not saved the salary, you have moved it.

The licence fee is also not the whole software cost. Parallel runs during migration, additional company codes, and payslip portal add-ons are the costs employers miss when they compare a quote against a bureau fee.

Compliance differences between outsourcing and in-house

Compliance duty sits with the employer either way. GOV.UK's guidance on running payroll sets out the reporting, deduction and payment obligations that apply whether you process internally or pay an agent.

RTI is the core. You must send an FPS on or before each payday, and an Employer Payment Summary when a period has no payments. Late or wrong submissions attract HMRC penalties. A bureau reduces the risk of missing a deadline. It does not remove your liability.

Auto-enrolment adds a second regulator. The Pensions Regulator expects you to assess workers, enrol eligible staff and pay contributions on time. Bureaus often run the assessment and the upload. The declaration of compliance remains the employer's.

Data protection splits the roles. Under UK GDPR the employer is the controller and the bureau is the processor, as the ICO explains in its guidance on controllers and processors. That means a written processor contract, defined instructions and breach notification terms.

In-house processing keeps payroll data inside your own systems, which some employers prefer for confidentiality. It also puts the breach risk, the access controls and the retention schedule squarely on your own IT and HR teams.

National Minimum Wage and National Living Wage rates change each April. Someone has to update the software, check the affected staff and evidence the review. That task exists in both models.

Named providers and how their London offers compare

London has the deepest pool of bureaus and payroll software vendors in the UK. The table below compares typical offers, not quotations. Fees move with headcount and complexity.

Software vendors sell you the tool. Bureaus sell you the outcome. Moorepay, MHR, Azets and LivePay sit on the bureau side of that line, with varying appetites for small clients. Their published offers are worth reading alongside independent agency reviews before you shortlist.

Check any provider on Companies House before signing. It confirms the legal entity, filing history and whether the trading name matches the contracting company. That step catches white-label resellers quickly.

Membership of the Chartered Institute of Payroll Professionals or the Payroll Software Suppliers Association is a useful signal of training standards. It is not a guarantee of service quality.

Cost factors that decide the answer for London employers

Headcount, churn, pay frequency and complexity all feed into the price. A bureau charging per payslip punishes high turnover, while a banded software licence rewards stability. Weekly payrolls and multiple entities add transactions and deadline pressure. Monthly salaried payrolls stay cheapest to run.

Multiple companies, share schemes, foreign nationals and salary sacrifice all add work. A bureau prices that work explicitly, while software may need add-on modules.

Pay planning affects the budget. If you expect uplifts above inflation, model the employer National Insurance and pension cost now. ONS inflation and price indices give you the planning baseline.

Worked example for a London employer with 60 staff on monthly pay, one company and no share schemes.

The bureau usually wins on total cost once the administrator's London salary is counted. Software wins if the administrator also does credit control and management accounts.

Decision checklist.

If two or more of those items are complex, a bureau is usually the lower-risk route. If the payroll is plain and someone already owns it, software is cheaper. A live payroll software pricing comparison against your own scenario settles the argument faster than any general claim.

Common questions