HMRC-recognised payroll software for small businesses
Want payday done and dusted? Pay your team the right amount every time. Your HMRC reports are sent after each pay run, so you can get back to running your business.
What small businesses notice after moving to Xero Payroll
Here's how Xero Payroll gives small businesses time back and makes every pay run simpler to get right.
Less time fixing payroll errors
Small businesses say they save four hours monthly fixing payroll errors since switching to Xero Payroll.* *Source: Xero survey, October 2025.
Faster pay runs, every time
92% of customers say they run payroll faster using Xero.* *Source: Xero survey of 254 small businesses in the UK, May 2024.
A simpler way to run payroll
Four in five businesses say Xero Payroll is easier than what they used before.* *Source: Xero survey, October 2025.
Stay on top of HMRC payroll compliance
When payday comes round, Xero sends a Full Payment Submission (FPS) to HMRC through Real Time Information (RTI) after each pay run. It also files an Employer Payment Summary (EPS) for the tax period, so your reports reach HMRC on time with less admin on your plate.
- Tax and deductions worked out for you
- Xero calculates Pay As You Earn (PAYE) tax and National Insurance from each employee's records, so every payslip adds up.
- Every pay run stored digitally
- Keep employee records up to date in Xero and run payroll reports whenever you need them.
HMRC basic payroll tools and tips
HMRC provides useful forms, calculators and support to help – including information on payroll rules and penalties.
Run small business payroll in a few clicks
Ready to spend less time on payday? Set up pay calendars and rates once. From then on, Xero works out tax, National Insurance, pensions, and leave with every pay run. When it’s time to pay, do it straight from Xero or with a payment file.
- Set pay calendars and pay rates
- Capture hours with built-in timesheets or connected apps
- Let staff submit expense claims in Xero Me
- Email payslips to your team
Automatically handle workplace pensions
Pension duties, sorted! Xero takes care of automatic enrolment and re-enrolment and passes the data on to your provider, so you spend less time on manual record keeping.
- Eligible staff assessed and enrolled
- Xero checks who's eligible, enrols them, and deducts each employee's contributions from their pay.
- Direct connection to Nest and The People's Pension
- Send data directly to Nest or The People's Pension. Using a different provider? Download a file and submit it to them.
Give employees self-service with Xero Me
Spend less time answering payslip and leave questions. Your staff use the Xero Me mobile app or web portal to check payslips and leave balances themselves. Leave requests and timesheets come to you for review before each pay run.
- View payslips whenever they need them
- Request leave
- Check leave balances
- Submit timesheets for review
Get accounting software with payroll included
Every pay run flows straight into your books, so wage costs are always up to date. The payroll switching wizard guides your setup, and with one source of truth you spend less time on double entry.
- One login for payroll and accounts
- Payroll data syncs to your Xero accounts automatically, so you can check wages and the wider books from a single login.
- A guided move to Xero Payroll
- The payroll switching wizard walks you through setup and helps automate data entry, using your latest FPS data.
FAQs on Xero's payroll programs for small businesses
Payroll software calculates each employee's pay, deducts tax, National Insurance and pension contributions, then reports the figures to HMRC. Xero does all of this with every pay run and emails payslips to your team.
Payroll software calculates each employee's pay, deducts tax, National Insurance and pension contributions, then reports the figures to HMRC. Xero does all of this with every pay run and emails payslips to your team.
Yes. Xero appears on HMRC's list of recognised payroll software, and it sends Real Time Information (RTI) to HMRC after every pay run.
Yes. Xero appears on HMRC's list of recognised payroll software, and it sends Real Time Information (RTI) to HMRC after every pay run.
Each tax month, you'll need to:
• send a Full Payment Submission (FPS) with each pay run
• send an Employer Payment Summary (EPS) if you're reclaiming statutory pay or paid no one
• check what you owe HMRC with the P32 report
• pay HMRC by day 22 of the following tax month if you pay electronically
Xero sends your FPS after each pay run, and GOV.UK explains how and when to pay HMRC.
Each tax month, you'll need to:
• send a Full Payment Submission (FPS) with each pay run
• send an Employer Payment Summary (EPS) if you're reclaiming statutory pay or paid no one
• check what you owe HMRC with the P32 report
• pay HMRC by day 22 of the following tax month if you pay electronically
Xero sends your FPS after each pay run, and GOV.UK explains how and when to pay HMRC.
If you run payroll yourself, you need to report PAYE to HMRC online, even with one employee. Xero sends these reports through RTI with every pay run, so you're covered from your first hire. Read GOV.UK's guide to PAYE for employers.
If you run payroll yourself, you need to report PAYE to HMRC online, even with one employee. Xero sends these reports through RTI with every pay run, so you're covered from your first hire. Read GOV.UK's guide to PAYE for employers.
Payroll is available on Xero Ignite, Grow, Comprehensive and Ultimate plans. Grow covers one person, Comprehensive covers five and Ultimate covers 10, while Ignite uses a per-person rate. Compare Xero UK plans to find your fit.
Payroll is available on Xero Ignite, Grow, Comprehensive and Ultimate plans. Grow covers one person, Comprehensive covers five and Ultimate covers 10, while Ignite uses a per-person rate. Compare Xero UK plans to find your fit.
Absolutely. Xero runs automatic enrolment and alerts you when re-enrolment is due, then sends data to Nest or The People's Pension, or creates a file for any other provider. Find employer guidance on The Pensions Regulator's website.
Absolutely. Xero runs automatic enrolment and alerts you when re-enrolment is due, then sends data to Nest or The People's Pension, or creates a file for any other provider. Find employer guidance on The Pensions Regulator's website.
Xero’s payroll reports let you check amounts paid and deducted. Filter results and drag and drop columns to show the figures you need, while the P32 report shows what you owe HMRC.
Xero’s payroll reports let you check amounts paid and deducted. Filter results and drag and drop columns to show the figures you need, while the P32 report shows what you owe HMRC.
At the end of the tax year, Xero sends the final submission indicator in your month 12 EPS. You can then review P11 and P60 reports and share P60s with your employees. If you spot a mistake in your final submission, correct it by 19 April.
At the end of the tax year, Xero sends the final submission indicator in your month 12 EPS. You can then review P11 and P60 reports and share P60s with your employees. If you spot a mistake in your final submission, correct it by 19 April.
Definitely. Payroll and VAT returns sit together in Xero, so you can submit VAT returns online for Making Tax Digital with the same login.
Definitely. Payroll and VAT returns sit together in Xero, so you can submit VAT returns online for Making Tax Digital with the same login.
Plans for growing businesses
Grow
for the first 6 months
Then £39 per month
Go beyond the basics - automate tasks and access performance dashboards.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 5 payments
- Payroll for 1 person
- 60 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 1 user
- Auto-reconcile transactions
- Company accounts and tax (optional £120 excl. Vat billed annually)
Comprehensive
for the first 6 months
Then £55 per month
Optimise profitability - tailor your insights for greater control.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 10 payments
- Payroll for 5 people
- 90 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 5 users
- Use multiple currencies
- Tailored financial health scorecards
- Make online bill payments (International) - Optional add-on
- Auto-reconcile transactions
- Company accounts and tax (optional £120 excl. Vat billed annually)
- Budget with smart suggestions
Ultimate
for the first 6 months
Then £70 per month
Future proof your scaling business - with advanced tools and analytics.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 15 payments
- Payroll for 10 people
- 180 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 10 users
- Use multiple currencies
- Tailored financial health scorecards
- Make online bill payments (International) - Optional add-on
- Track time and costs for projects for 10 users
- Analyse KPIs and ratios
- Benchmark against the industry
- Auto-reconcile transactions
- Company accounts and tax (optional £120 excl. Vat billed annually)
- Budget with smart suggestions
Need just the basics? See plans for simpler business needs. View plans
Plans for growing businesses
Grow
for the first 6 months
Then £39 per month
Go beyond the basics - automate tasks and access performance dashboards.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 5 payments
- Payroll for 1 person
- 60 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 1 user
- Auto-reconcile transactions
- Company accounts and tax (optional £120 excl. Vat billed annually)
Comprehensive
for the first 6 months
Then £55 per month
Optimise profitability - tailor your insights for greater control.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 10 payments
- Payroll for 5 people
- 90 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 5 users
- Use multiple currencies
- Tailored financial health scorecards
- Make online bill payments (International) - Optional add-on
- Auto-reconcile transactions
- Company accounts and tax (optional £120 excl. Vat billed annually)
- Budget with smart suggestions
Ultimate
for the first 6 months
Then £70 per month
Future proof your scaling business - with advanced tools and analytics.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 15 payments
- Payroll for 10 people
- 180 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 10 users
- Use multiple currencies
- Tailored financial health scorecards
- Make online bill payments (International) - Optional add-on
- Track time and costs for projects for 10 users
- Analyse KPIs and ratios
- Benchmark against the industry
- Auto-reconcile transactions
- Company accounts and tax (optional £120 excl. Vat billed annually)
- Budget with smart suggestions
Need just the basics? See plans for simpler business needs. View plans
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