How much do Accountants charge for runing payroll?

This is a question that’s asked quite often by small businesses or startups that don’t have the experience of processing payroll in-house.

There’s a huge amount of legislation that associated with payroll – currently over 170 pieces to keep up to date and compliant with – so for some small businesses, using an accountant to process payroll can be a good option to avoid the risk of not being compliant and the potential financial penalties associated with non-compliance.

Accountants tend to be an excellent option for micro-companies – those with 12 employees or less. They can take the stress out of running payroll while keeping small businesses compliant, but still require some input from the business owner or a designated person in the business.

Some practices will run payroll from companies with one employee upwards.

We’ve contacted several accountancy firms who have kindly provided information on their pricing:

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A firm we contacted in Leeds said their charging structure is as follows:

Administration charge of £20 per month for small businesses
£5 per employee per payslip (weekly or monthly)
Payslips are emailed via PDF and password protected
The employer arranges and makes payment of the net salary to the employee and deductions to HMRC, pensions and for other benefits

If a pension is needed, the one-off monthly admin charge increases from £20 per month to £30 per month. The other fees and responsibilities remain the same.

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Another firm that’s based in Kent has a slightly different pricing structure:

They don’t charge an admin fee for running payroll
Price for payslips is broken down based per pay run, whether weekly, fortnightly or monthly:

1-8 employees - £30 per month
9-15 employees - £50 per month
16-25 employees - £75 per month
26+ employees is a tailored quote

Payslips are available to employees through a client portal
The employer arranges and makes payment of the net salary to the employee and deductions to HMRC, pensions and for other benefits
If benefits or pension administration is required, this is an additional £5 per month on each tier in the increasing scale

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Another accountancy firm we contacted, also in Kent, had a different structure again. They charge one off-fees for the following services:

Initial set up of the payroll scheme - £80
Workplace pension scheme set up - £450
Late filing penalty appeal - £30 per appeal
£50 per employee to submit a P11D

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Their recurring fee structure is as follows:

If banking services are required (up to 30 employees) - £50 per payrun
If monthly CIS EPS submissions are required - £20 per submission
Prices per employee per payslip are charged based on the number of employees in the tiered structure (annual charges):

1-3 employees - £540
4-6 employees - £720
7-10 employees - £900
11-15 employees - £1080
16-20 employees - £1380
21-35 employees - £1800
36-100 employees - £2400
100+ employees - Quote on request

This accountancy firm provides each of their clients’ staff members access to an online portal to access payslips and P60s. They say, however, that they can cater to each client’s requirements including posting or emailing payslips to staff members if required, for a small additional fee.

All client communication and liaison with HMRC is included in the agreed fixed fee to avoid any surprise costs to the client. They advise that they tailor the work they carry out to each client’s requirements, managing the entire service for some, where others manage elements of the payroll themselves, such as paying their staff.

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In all three models shown, VAT is applicable on all services.

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Considerations when hiring an accountant to run payroll:

Engaging an accountant to run payroll for your small business can be a crucial step in ensuring accurate and compliant management of your employees' pay and benefits. Here’s a list of important things to consider when working with an accountant for payroll:

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Expertise and qualifications: Ensure the accountant you hire has experience and expertise in payroll management. Verify qualifications and/or memberships of the Chartered Institute of Payroll Professionals (‘CIPP’).

Software and technology: Check whether the accountant uses reliable and up-to-date payroll software that can handle tax calculations and other necessary functions. Integration with your existing accounting systems can also be beneficial.

HMRC registration: Ensure your business is properly registered with HMRC for payroll purposes. Your accountant can guide you through this process.

RTI compliance: Real-Time Information (‘RTI’) reporting is mandatory in the UK. Your accountant should be well-versed in RTI and capable of submitting accurate payroll information to HMRC on time.

P45 and P60 issuance: Ensure your accountant provides P45 forms to employees when they leave your company, P11D forms for benefits in kind and P60 forms at the end of the tax year. Establish whether this is included in the cost of service or whether additional fees apply for the service.

Data security and GDPR: Payroll involves sensitive personal information. Ensure your accountant follows the GDPR (‘General Data Protection Regulations’) guidelines for data protection and has suitable cyber security in place to protect sensitive employee data.

Fees and services: Clarify the scope of services your accountant will provide and agree on fees upfront so there are no surprises. This will also ensure that you can budget accurately.

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For small businesses and start-ups, using an accountant to process payroll can be a good option. Using a reputable and suitably qualified accountant can ensure a business keeps compliant with over 170 pieces of payroll and benefits legislation as well as ensuring employees are paid correctly and on time.

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