A payroll bureau is a specialist firm that runs your payroll for you. You tell the bureau who worked, what they earned and any changes that month. The bureau calculates everyone’s pay, produces payslips, reports to HMRC and handles your workplace pension. You stay in control of the decisions; the bureau handles the processing and the compliance.
This guide explains what a UK payroll bureau actually does, how it works month to month, what it typically costs, and how it compares with running payroll yourself or using payroll software.
What a payroll bureau does
A full-service payroll bureau takes on the work that most employers find time-consuming or risky to get wrong:
- Pay calculations: gross pay, overtime, bonuses, commission and deductions for every pay run.
- Tax and National Insurance: PAYE income tax and employee and employer NICs, using the correct tax codes.
- RTI submissions to HMRC: a Full Payment Submission (FPS) every time employees are paid, plus Employer Payment Summaries (EPS) where needed.
- Payslips: produced and delivered to employees, usually digitally.
- HMRC liability reports: telling you exactly how much PAYE and NIC to pay HMRC and when.
- Starters and leavers: setting up new employees, and issuing P45s when people leave.
- Statutory payments: Statutory Sick Pay, maternity, paternity and other statutory pay.
- Pension auto-enrolment: assessing employees, calculating contributions and sending pension provider submissions. See our pension auto-enrolment service.
- Year end: final submissions for the tax year and P60s for every employee.
Some bureaux also handle more specialist work, such as CIS payroll for construction businesses, director-only payrolls, white-label payroll for accountancy practices, and UK payroll for overseas companies that employ staff in the UK.
How a payroll bureau works, step by step
The routine is simple once you are set up. A typical monthly cycle looks like this:
- You send the changes. Hours, overtime, new starters, leavers, sickness and any pay changes, usually a few days before payday.
- The bureau processes the payroll. Pay, tax, NICs, pension contributions and statutory payments are calculated.
- You check and approve. You receive a summary report to review before anything is final.
- Payslips and reports go out. Employees receive their payslips, and you receive the payment figures for wages, HMRC and the pension provider.
- HMRC and the pension provider are updated. The bureau sends the RTI submission and the pension contribution file on time.
Weekly, fortnightly, four-weekly and monthly payrolls all follow the same pattern; only the frequency changes.
Does a payroll bureau pay my employees?
It depends on the bureau. Some make the payments on your behalf. Others give you the exact figures to pay each employee, HMRC and your pension provider, and you make the payments from your own business account. Ask any bureau you are considering how they handle this.
Why the deadlines matter
Under Real Time Information, an FPS must normally reach HMRC on or before the day you pay your employees. HMRC can charge a monthly penalty for late filing, based on the size of the business:
| Number of employees | Monthly late-filing penalty |
|---|---|
| 1 to 9 | £100 |
| 10 to 49 | £200 |
| 50 to 249 | £300 |
| 250 or more | £400 |
Employers must also keep payroll records for 3 years from the end of the tax year they relate to. A bureau keeps these records as part of the service, so they are there if HMRC ever asks.
Payroll bureau vs doing it yourself
| In-house with software | Payroll bureau | |
|---|---|---|
| Who runs payroll | You or a member of staff | A specialist payroll team |
| Who keeps up with rule changes | You | The bureau |
| Holiday and sickness cover | Needs a trained backup | Covered by the bureau team |
| Costs | Software licence plus staff time | A per-payslip or monthly fee |
| Best suited to | Businesses with an experienced in-house payroll person | Businesses that want payroll handled without hiring for it |
Software can be the cheapest option on paper, but someone still has to learn it, run it, check it and stay on top of legislation. For most small and medium-sized employers, the real cost of in-house payroll is the hours it takes and the risk of mistakes. That is why many businesses now outsource payroll.
How much does a payroll bureau cost?
Most bureaux charge per payslip, per employee, or a fixed monthly fee. Things that affect the price include how many employees you have, how often you pay them, and whether you need extras such as CIS or multiple pay frequencies.
At Payroll Service (UK) Ltd, pricing starts from £2.50 + VAT per payslip, with no setup fees, no exit fees and no long-term contract. Pension auto-enrolment is included. See our payroll pricing for full details.
What to look for in a payroll bureau
- Clear pricing: no hidden charges for starters, leavers or year end.
- No lock-in: a provider that keeps your business by doing a good job, not through a contract.
- A named team you can reach: real people who know your payroll.
- Pension auto-enrolment included: not bolted on as an extra.
- Data security: secure handling of employee data and compliance with UK GDPR.
- A smooth switch: help moving from your current provider, including mid-year.
Frequently asked questions
Is a payroll bureau the same as an umbrella company or an employer of record?
No. A payroll bureau processes payroll on your behalf, but you remain the employer. An umbrella company or employer of record becomes the legal employer of the workers. Payroll Service (UK) Ltd is a payroll bureau. We are not an umbrella company or an employer of record.
Can I switch payroll bureau partway through the tax year?
Yes. Your year-to-date figures for each employee are carried over, so the switch is seamless for your staff and for HMRC.
Do I need a payroll bureau if I only have a few employees?
Even a payroll of one or two people needs an RTI submission every pay run and, in most cases, a workplace pension. Many of our clients are small businesses and director-only companies that simply want it taken care of.
Can accountants use a payroll bureau for their clients?
Yes. Many accountancy practices outsource their clients’ payroll to a bureau on a white-label basis, so the service stays under the practice’s own brand. We run this for practices through our partner site: white label payroll for accountants.
Talk to a UK payroll bureau
Payroll Service (UK) Ltd has run payroll for UK employers since 2011 and works with more than 500 clients across the UK from our base in Cardiff. Explore our payroll services or contact us for a free, no-obligation quote.
About Payroll Service (UK) Ltd: we are a Cardiff payroll bureau, established in 2011 and run by director Jack Lloyd-Lewis. We run weekly, fortnightly and monthly payrolls, pension auto-enrolment and CIS for UK employers, overseas companies with UK staff, and accountancy practices that outsource their clients’ payroll, using Sage 50 Payroll and BrightPay.