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Introducing UK Payroll in Xero

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At Xerocon London we announced UK Payroll in Xero. Today, we’re pleased to report that you can now set up your payroll ready for processing in the new financial year.

Getting Started with UK Payroll in Xero from Xero.

We’ve built beautiful online accounting and payroll software for small businesses. It’s easy to implement and use from anywhere. Payroll information flows seamlessly into your general ledger, with journals created automatically.

We’ve produced online training in Xero U to help you get started. One series for our Accountant and Bookkeeper partners and one for our business customers.

Powerful UK payroll software

Changing your payroll software isn’t a decision made lightly, but combining two primary business systems saves both time and money. Xero is the platform of choice for small business.

Starting today, you can get ready for 6 April by setting up payroll to suit the needs of your business, including adding employees. We’re enabling payroll processing from 6 April, in time for the 2015/2016 financial year.

UK Payroll in Xero includes support for the following:

Employer Settings

  • Claim £2,000 Employment Allowance
  • Tracking by Employee Groups for cost analysis
  • Standard Public Holidays provided, grouped by country
  • Add custom business holidays and holiday groups as required
  • Record Tax Office details for reporting to HMRC
  • Record bank and pension fund details

Employee Management

  • Personal details including employee photo
  • Employment details including salary or hourly rate and hours per week
  • Monthly, weekly, fortnightly, quarterly, annual & 4-weekly pay
  • Leave balances for annual leave and custom time off types
  • Notes to record comments against each employee
  • P45 Leaver Forms
  • New employee starter declaration

Pay Elements

  • Hourly and salaried pay rates
  • Unlimited custom earning rate types, based on either: base pay rate, rate per unit, or fixed amount
  • Unlimited custom leave types in addition to the statutory leave types
  • Unlimited custom benefit, deduction, and reimbursement rate types
  • Student Loan repayments
  • Record attachments of earnings orders

Tax & NIC

  • Built-in Tax and NIC rates
  • Tax and NIC rate updates automatically each year
  • Week 1 / Month 1 pay basis
  • Directors special NIC calculations


  • Electronic payment of employee wages via BACS file
  • P32 Tax & NIC amounts to be paid to HMRC

GL Integration

  • Automatic posting of payroll journals to general ledger
  • Reconcile your net wages by allocating the spent transaction to your wages payable account
  • ‘Wages Payable’ (Account number 814), ‘Pensions Payable’ (Account number 858), ‘Earnings Orders Payable’ (Account number 868), and ‘Student Loan Deductions’ (Account number 947) have been automatically created
  • For existing customers we checked for the existence of the account number or name and if it already existed in the chart of accounts , we didn’t add the corresponding chart of account, if it does not exist we added to the chart of accounts.


  • Access online and PDF payslips for any previous pay run
  • Email payslips directly to employees
  • Invite employees to self-service payslips from the employee app

Online Filing

  • RTI submissions
  • Submission log complete with HMRC information
  • View confirmation of successful transmission
  • Records Agent details
  • Agent RTI Filing


  • Auto enrolment features
  • Calculation of Qualifying Earnings
  • Stakeholder pensions
  • Employee and employer contributions entered as an amount or percentage

HMRC Forms

  • P32 employer deduction payment record
  • P60 employee’s end-of-year summary
  • P45 employee leaving form

Employee App

  • Available online and coming soon to mobiles (iOs and Android)
  • View pay history and download payslips
  • Request time off
  • Manager role to allow for approval of time off requests

This is just the beginning. You’ll see constant enhancements, improvements and features being made available as we get your feedback and strive to make Payroll in Xero smarter and more powerful.

Learn more about getting ready for UK Payroll in the help centre.

Pricing, dates and more

We’re removing our existing Premium plan from 31 March and introducing new Premium plans based on the number of employees you pay each month. If you’re on the Standard plan you’ll get one employee included. The number of employees is the number of active employees you pay per month.

uk payroll pricing

Each new plan’s price includes the Xero accounting features you love, and now payroll as well. It’s one price for accounting and payroll software together – just pick a plan to fit the size of your business.

If you’re on the Premium plan by 31 March, we’ll give you 10 payroll employees free and you’ll continue to pay £25 a month for two years.

Now’s the time to make the change to UK Payroll in Xero. Get ready to start the new financial year on the right foot.


Richard Dean
March 4, 2015 at 8.41 pm

We are using Xero for our accounts and really like it. Is this monthly charge in addition to the Xero accounting charge?

March 4, 2015 at 11.20 pm

I’d love to have payroll more integrated with Xero, not to mention online instead of software, but I currently use Brightpay which is around £106 for the entire year, for unlimited employees. Why on earth would I switch to your payroll for £60 a month (I have around 30 employees), which is £720 for the year. That’s around £614 difference!! Not to mention Brightpay is very nice and simple to use software with everything I need.

So you really need to come up with a more competitive pricing plan before I’d ever think of being interested, because I really think your prices are ridiculous! And the benefits certainly do not outweigh the costs. Even Sage is cheaper than yours for the version that would suit me!

stuart middleton
March 5, 2015 at 1.02 am

Already signed up! Great savings in time and payroll processing fees, well done Xero.

Jon Day
March 5, 2015 at 3.18 am

Why the difference between NZ approach and UK approach ? NZ model of price increase if and when you use the payroll module makes sense and is fair. The UK model or £5pm increase (albeit delayed for existing users) whether you use the payroll features or not seems unfair on companies that don’t need the payroll option.
You also stated at Xerocon that Payrun would still indefinitely as an option for existing companies. This seems to have rolled out as a removal of the Payrun feature for every existing company that was not already using Payrun, and the option of both for those that were using Payrun. Those companies that can’t use the new Payroll module have now had a feature totally removed from them. It is obviously possible to have both enabled, so why not leave both for at least a transition period as highlighted at Xerocon.

Oliver Furniss
March 5, 2015 at 8.14 am

@Richard, each plan’s price includes the Xero accounting features and now payroll as well. It’s one price for accounting and payroll software together.

Oliver Furniss
March 5, 2015 at 8.15 am

@Stuart, thanks for the feedback!

Oliver Furniss
March 5, 2015 at 8.19 am

@Jon, when deciding pricing for each country there are a number of factors that are taken into account including competitors pricing and product offerings, market size, and many more.

The previous ‘Pay Run’ feature available from the Accounts menu was kept for customers that have used it previously. For new customers and customers who had never used it we removed the option.

Robert Cox
March 5, 2015 at 9.51 am

Brilliant stuff. When originally using xero we needed payroll and thought it was poor and ended up having to use an external system and manually import!

From what I’ve seen so far, looks very clean and easy to use!

Oliver Furniss
March 5, 2015 at 10.09 am

@Robert, great stuff thanks for the feedback.

Matthew Short
March 5, 2015 at 12.56 pm

Zero is fantastic. But unfortunately you’ve priced this too high for our situation and released it too late to allow time to test. I’ll review it again next year but for now I’ll stick with Moneysoft. It’s a pity as I ‘d like an integrated package. But what were you thinking price wise? Sorry Xerox, it’s a sad face from me 🙁

Blue Mouse
March 6, 2015 at 3.14 am

Great post it look like a great addon I will be looking into this more and sharing this with my team thanks!

Kelly Roper
March 6, 2015 at 4.22 am

@Oliver – when will the new plans be available? We have a client with 19 employees, so they will need the new Premium 20 plan. Do we really need to wait until 31st March to get employees set up?!

March 6, 2015 at 4.58 am

Can anyone confirm whether the update can now process a PAYE refund?


Adrian Morgan
March 6, 2015 at 9.00 am

Looks good but I currently have 4 full time employees and 4 part-timers but that occasionally tips over the 10 mark. Does that mean I will get charged £10 extra month? It would seem sensible to charge £1 per employee but I am not sure that’s what you are doing…

Oliver Furniss
March 6, 2015 at 12.56 pm

@Kelly, you can set up the employees now and from April 1st onwards when you go to processing the payroll you will be prompted to upgrade to the relevant plan based on the number of employees. You don’t have to wait. Get everything ready now 🙂

Oliver Furniss
March 6, 2015 at 12.59 pm

@Adrian, if you pay eight employees you can use the Premium 10 plan. For those months when you pay more than ten employees you would upgrade to the relevant plan, for example Premium 20. You would then be able to downgrade to Premium 10 once you need to pay less than ten employees.

March 11, 2015 at 4.59 am

Looks interesting but you have seemingly rolled out this new product and platform with complete disregard for your existing user base by removing the old platform whilst the new one is pending and you now advise us to input pay run information using manual journal entries in the meantime? This is appalling!

Gary Richards
April 10, 2015 at 3.21 am

No CIS processing makes this unusable for a large segment of our clients. This needs to be addressed for a UK product.

We are an accounting firm running 180 small payrolls for our clients. The pricing plan is clearly not geared to our situation, and is economically not a runner.

For payroll, the helpdesk needs to be able to answer within a few minutes and sort out an issue on the phone. A half day (or worse) turnaround to an email ticket won’t work in a fast moving payroll environment.

We have clients who would like to use this because of the mobile app capabilities, but it will need to move along in terms of price, function and help desk before we could recommend it.


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