Payroll guide
How much does outsourced payroll cost?
See indicative UK monthly payroll costs for teams of 5, 10 and 20, plus the extras to check before comparing quotes.
Find MarlinBy Find Marlin · Published · Reviewed
What to budget for monthly payroll
These budgets assume one UK payroll and 12 monthly pay runs. Figures are for the whole team and exclude VAT, setup and separately charged extras.
| Employees paid monthly | Monthly budget guide |
|---|---|
| 5 employees | Around £40 |
| 10 employees | Around £55 |
| 20 employees | Around £100 |
Find Marlin estimates based on the rounded middle of four published UK provider price lists, checked November 2026. Service inclusions vary, so use these figures as a guide when you ask for a quote.
Check what the quote includes
Ask the provider which of these are included and which cost extra.
- Setup and transfer of payroll records
- HMRC Real Time Information submissions
- Workplace pension administration
- Employee starters and leavers
- Year-end processing and P60s
- Corrections and additional pay runs
- Employee queries and support
Check whether extras are charged per employee, per pay run or as a flat fee.
First-year example for 10 employees
At £55 a month, payroll processing would cost £660 a year. Add a hypothetical £100 setup fee and the first-year total would be £760, before VAT and separately charged extras.
If you pay weekly, ask for an annual total based on your actual number of runs.
What affects payroll outsourcing costs?
Number of employees. Check which employees are included and how the fee changes if your headcount grows or falls.
Payment frequency. Weekly payroll can cost more than monthly payroll because it requires more frequent processing.
Payroll complexity. Overtime, bonuses, commission, statutory payments and multiple pay groups can increase costs.
Pension administration. Some providers include workplace pension administration; others charge separately.
Service level. Fully managed payroll generally costs more than a basic processing service.
Is outsourcing cheaper than managing payroll internally?
That depends on your business.
An internal payroll operation may involve software subscriptions, staff time, training, absence cover and maintaining knowledge of changing payroll requirements.
For businesses with straightforward payrolls, handling payroll internally may be economical. For growing businesses or those with more complicated payroll arrangements, outsourcing can provide greater convenience and predictable administration costs.
How can you find the right payroll provider?
Rather than choosing solely on price, compare providers based on their experience, services, support arrangements and total fees.
Frequently asked questions
- What is a minimum monthly fee?
- It is the lowest amount a provider charges for a pay period or month, even when a per-employee calculation comes to less. Ask how it applies to your headcount.
- Should I compare prices including VAT?
- Ask providers whether their figures include VAT and request a breakdown of recurring and one-off charges so you can compare on the same basis.
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