Reviews
Part of A framework for comparing payroll software using statutory scenarios and service checks
Standalone, embedded or free: choosing a payroll software route
Compare six payroll software product routes for England by operating model: the free official tool, standalone payroll and payroll inside accounting software.
What to take away
- Six routes are in playHMRC Basic PAYE Tools, BrightPay, Sage Payroll, Xero Payroll, QuickBooks Online Payroll and FreeAgent Payroll.
- One is a free official tool, one is a standalone payroll product, and four sit inside or beside an accounting platform.
- Pick the operating model first, then the product. The model decides edition limits, pension handling and who holds the employee record.
- Decide on blocking failures in a test, not on the lowest price.
Three ways to run payroll
The six routes fall into three operating models. A free official tool serves micro-employers and leaves payslips elsewhere. A standalone product runs payroll on its own. A suite or accounting product puts payroll next to the ledger, so wages post into the same records.
Compare the limit to check and the pension handling, because those two columns separate the routes fastest.
| Operating model | Route | Limit to check | Pension handling |
|---|---|---|---|
| Free official tool | HMRC Basic PAYE Tools | Under ten employees; no payslips | Limited scope |
| Standalone payroll | BrightPay | Editions by employer and employee count | Provider and auto-enrolment links |
| Cloud payroll in a suite | Sage Payroll | Plan tier sets the employee limit | Sage auto-enrolment |
| Payroll in accounting software | Xero Payroll | Tied to the Xero plan | Xero auto-enrolment |
| Payroll beside accounting software | QuickBooks Online Payroll | Tiers with per-employee charges | Pension add-ons |
| Payroll in an eligible account | FreeAgent Payroll | Eligibility by account type | Auto-enrolment included |
The six payroll providers covered separately take the same routes from the supplier side. Confirm every limit in the table on a live quote, using your own employee count.
Where the free official tool stops
HMRC describes Basic PAYE Tools as free payroll software for businesses with fewer than 10 employees. It can perform most payroll tasks, including working out tax and National Insurance and sending the information to HMRC.
That makes it the narrowest route in the table. Payslips are handled elsewhere, and pension scope is limited. A micro-employer with simple PAYE can run on it at no licence cost, but a firm that needs payslips and pension files will need a second tool beside it.
Operating models, not logos
Basic PAYE Tools
- Route
- Narrow official
- Payslips
- No built-in
- Contracts
- None
- Plans
- Fixed
- Implementation
- Simple
Commercial alternatives
- Route
- Broader connected
- Payslips
- Varies by product
- Contracts
- Supplier contracts
- Plans
- Changing plans
- Implementation
- Choices required
Match the model to the employer
The right model follows the employer, not the brand. Read down the list for the situation closest to yours, then take that route into a trial rather than straight to a purchase.
- Micro-employer under ten staffBasic PAYE Tools covers online reporting at no licence cost, but payslips are handled elsewhere.
- Payroll-only firm or bureauBrightPay's editions and bureau licensing fit volume work, and its pension connections cut manual files.
- Accounting-led companyXero Payroll posts wages into the ledger and runs auto-enrolment in the same platform.
- Existing Sage or QuickBooks customerstaying put avoids duplicate employee records, though tier limits and per-employee charges set the total.
- Adviser-led small companyFreeAgent Payroll applies only where business type and account meet the eligibility rules.
A growing small business often has to weigh these lines against HR needs as well. If you would rather outsource payroll altogether, the payroll agency reviews compare Azets, MHR, Moorepay and LivePay on service scope.
Suite and accounting routes trade flexibility for one employee record. A change of accounting platform later can mean a change of payroll, so ask each supplier how data leaves the product before you commit. Exit and export terms belong in the written quote, not in a verbal assurance.
Recognition filters eligibility, not quality
HMRC's recognised payroll software list confirms that a named product can report PAYE information online. Check the exact current listing on the day you shortlist, product and edition included.
HMRC states that it cannot recommend one software product or service over another. Recognition therefore cannot settle quality, support or price. Treat it as the entry ticket, then compare the operating models above.
Decide on blocking tests, then on cost
Run one identical scenario across the finalists. Use an ordinary run, a starter, a leaver, a correction, a nil-payment EPS and a pension file sent to the provider. Record calculation evidence, approvals, HMRC response states, reports, exports and audit history.
The decision rule is the first finalist to clear every blocking test, not the cheapest. Then put the quotes on one footing:
- Identical employer, employee and pay-frequency counts on every quote
- Implementation, training and migration listed as separate lines
- Extra runs, storage, integrations and annual uplift in writing
- Exit, data export and notice terms confirmed
- Temporary discounts separated from the continuing annual total
Compare continuing annual totals, not first invoices. A payroll software budget template keeps migration, assurance and renewal costs in the same sheet as the licence fee.
Common questions
Which operating model suits a small employer in England?
For fewer than ten employees with simple PAYE, HMRC Basic PAYE Tools is free but has no payslips. An employer that needs payslips, pension files and support moves to a standalone product. Accounting-led firms are better served inside Xero Payroll or FreeAgent Payroll.
How do the six routes differ by operating model?
One is a free official reporting tool, one is a standalone payroll product, and four are embedded in or sold beside an accounting platform. The difference shows up in edition limits, employee thresholds and pension connections.
Does HMRC recognition mean a product is recommended?
No. Recognition shows that a product can report PAYE information online. HMRC cannot recommend one product over another, so the suitability checks stay with the employer.
What belongs in the blocking tests?
An ordinary run, a starter, a leaver, a correction, a nil-payment EPS and a pension file sent to the provider. Record the evidence for each, then pick the first finalist that clears them all.
