Guide: What are the Best Payroll Software for UK Businesses?

If you own or operate a business in the UK, you know how important it is to have an efficient and reliable payroll system. Payroll is one of the most critical aspects of any business, and choosing the right payroll software can make all the difference. However, with so many options available, selecting the best one for your business can take time and effort. That's where this comprehensive guide comes in. In this article, we'll walk you through everything you need to know about choosing the right payroll software for your UK business. From understanding the different types of payroll software to evaluating the key features, this guide will help you make an informed decision. So, whether you're a small business owner or a large corporation, read on to learn how to streamline your payroll process and save time and money.

The Importance of Choosing the Right Payroll Software

Payroll is a critical part of any business, and choosing the right payroll software can make all the difference in how efficient and accurate your payroll process is. With the right payroll software, you can automate many time-consuming tasks associated with payroll, such as calculating taxes and deductions, generating payslips, and processing payments. This saves you time, reduces the risk of errors, and ensures that your employees are paid accurately and on time.

Choosing the right payroll software also means complying with UK payroll regulations. The UK has strict payroll legislation; non-compliance can result in hefty fines and legal action. Payroll software designed for the UK market will help you comply with HMRC regulations, such as Real Time Information (RTI) reporting and Automatic Enrolment for workplace pensions.

Finally, choosing the right payroll software can help you save money. Streamlining your payroll process can reduce the time and resources required to manage payroll, translating into cost savings for your business. Additionally, many payroll software solutions offer pricing models based on the number of employees, so you only pay for what you need.

Types of Payroll Software

Several types of payroll software are available, each with its own features and benefits. The three main types of payroll software are desktop, cloud-based, and online payroll services.

Desktop Software

Desktop payroll software is installed on a computer or server and is accessed through that device. This type of software is typically purchased outright and installed on your computer or server. Desktop software can be a good option for businesses with a stable and secure network and prefer complete control over their payroll data.

One of the main disadvantages of desktop payroll software is that it is less flexible than cloud-based software. With desktop software, you can only access the software from the device it is installed on, which can be limiting if you need to access your payroll data from multiple locations.

Cloud-Based Software

Cloud-based payroll software is hosted on remote servers and accessed through a web browser or mobile app. This type of software is typically sold as a subscription service and is accessed through the Internet. Cloud-based software can be a good option for businesses that want the flexibility to access their payroll data from anywhere, anytime.

One of the main advantages of cloud-based software is that it is more flexible than desktop software. With cloud-based software, you can access your payroll data from any device with an internet connection, which can be especially useful if you have remote workers or multiple offices. Moreover, you won't incur any costs associated with installation or updates as everything is included.

Online Payroll Services

Online payroll services are third-party providers that manage your payroll for you. With online payroll services, you provide your payroll data to the provider, and they handle all aspects of your payroll process, including calculating taxes and deductions, generating payslips, and processing payments. Online payroll services can be a good option for businesses that prefer to outsource their payroll process entirely.

One of the main advantages of online payroll services is that they take care of all aspects of your payroll process, freeing up time and resources for your business. Additionally, online payroll services often offer additional HR-related services, such as employee onboarding and benefits administration.

However, you will still have much work to do for preparing payroll. Using an outsourced service can be very time-consuming as you must send your employees' timesheets and information so the service provider can run payroll for you.

Features to Consider When Selecting Payroll Software

When selecting payroll software, there are several key features to consider. These include:

Payroll Processing

The payroll processing feature is the core of any payroll software solution. This feature should include all the necessary tools to manage your payroll process, including calculating taxes and deductions, generating payslips, and processing payments.

Compliance

Compliance is a critical feature when it comes to UK payroll software. Your payroll software should comply with all HMRC regulations, including Real Time Information (RTI) reporting and Automatic Enrolment for workplace pensions. Additionally, your payroll solution should at least generate documents, including P60s, P11s, P45s or P30s.

Integration

Integration is another essential feature to consider when selecting payroll software. Your payroll software should be able to integrate with other HR software solutions, such as time and attendance systems or holiday management systems.

User Interface

The user interface of your payroll software should be intuitive and easy to use. The software should be designed with the user in mind and easy to navigate, even for users with limited technical expertise.

Employee self-service app

A self-service app allows employees to access their payslips, view their current and past payments, submit timesheets or leaves, and more. This feature can be handy for businesses with remote workers or multiple offices.

Pricing Models of Payroll Software

Payroll software pricing models can vary significantly between providers. Usually, software vendors offer free trials. The most common pricing models are:

Per Employee

Many payroll software solutions charge on a per-employee basis. This means that the cost of the software is based on the number of employees you have. This can be a good option for small businesses with few employees.

Monthly Subscription

Monthly subscription pricing is a standard pricing model for cloud-based payroll software. With this model, you pay a monthly fee for access to the software. This can be a good option for businesses that want the flexibility to scale their payroll software up or down as their business grows or changes.

Pay-As-You-Go

Pay-as-you-go pricing is another common pricing model for payroll software. With this model, you only pay for the services you use. This can be a good option for businesses that have fluctuating payroll needs.

Best Payroll Software for UK Businesses

Many payroll software solutions are available on the market, each with its own features and benefits. Here are some of the top payroll software solutions for UK businesses:

Moonworkers

Moonworkers is an excellent option for customer support and a personalised HR and payroll experience. Unlike industry giants such as IRIS and ADP, Moonworkers operates on a smaller scale, allowing customers to enjoy a more individualised and tailored customer experience.

The software provides various features, including standard payroll solutions like automatic enrolment and year-end tax reporting. Additionally, all employees gain unrestricted access to the Shop Street app upon enrolment. This app offers unlimited discounts on over one thousand brands, potentially saving employees up to 6% on everyday essentials.

More importantly, Moonworkers is the only solution to automate casual staff payroll. Thanks to its integrated rota planner and attendance tracking tool, Moonworkers generates timesheets and takes care of the 52-week average holiday pay.

Moonworkers enables creating and customising automated workflows for HR processes, such as onboarding checklists and performance reviews. Including eSignature functionality adds an extra layer of security, which is particularly beneficial for remote businesses.

Moreover, Moonworkers offers a range of other intelligent features designed to streamline and optimise HR and payroll solutions. With exceptional customer service and transparent pricing, Moonworkers is a reliable choice for small businesses.

MHR iTrent

MHR iTrent is highly recommended for its extensive features that effectively streamline HR and payroll processes. With over 35 years of experience in the industry, MHR specialises in talent management and serves over 1,000 companies.

For small businesses in the UK, MHR offers a comprehensive suite of payroll services. Their award-winning payroll and HR software, iTrent, is the top solution for integrated payroll and HR needs.

iTrent's modular system has numerous features catering to diverse requirements. Notably, it includes a unique salary modelling feature that assists with financial planning by estimating people's costs, including salary and pension payments.

In addition, iTrent provides automated quarterly software updates to ensure compliance with payroll legislation. It also offers an HR chatbot, enabling employees to receive instant answers to their queries. This feature saves the HR and payroll team valuable time, as they no longer need to address every employee's concern individually.

IRIS

IRIS Software is very relevant for small businesses looking for a comprehensive solution to their administrative responsibilities. As one of the UK's longest-running private software companies, IRIS has provided administration solutions to businesses, charities, and the public sector for over 40 years.

Catering to companies of all sizes, IRIS offers a specialised integrated payroll and HR software called IRIS Software, designed specifically for small businesses.

This all-in-one platform incorporates the features of IRIS' standalone payroll product, including auto-enrolment, Real-Time Information (RTI) and HMRC compliance, comprehensive reporting functionality, and automated month-end processes (P32).

Additionally, IRIS Software enables effective management of HR processes, simplifying tasks such as onboarding and holiday booking. It streamlines lengthy administrative procedures by granting employees access to their self-service portal, empowering them to handle various HR-related tasks independently.

Furthermore, IRIS Software goes beyond payroll and HR responsibilities by providing innovative bookkeeping features to address your bookkeeping needs.

With its extensive range of features and long-standing reputation, IRIS Software stands as a reliable and comprehensive solution for small businesses administrative requirements.

ADP

ADP UK suits businesses seeking software with proficient employee training and development functions well. With over 70 years of industry-specific experience, ADP is one of the UK's largest and most esteemed payroll and HR specialists. Its client base includes renowned companies like Coca-Cola, Innocent, and Amazon.

ADP caters to companies of all sizes, making it an ideal software solution for small businesses aiming to scale. Its global offering sets ADP apart, allowing businesses to manage HR and payroll worldwide. Unlike many competitors that operate solely in the UK, ADP has a presence in over 140 countries, providing access to thousands of implementation team professionals who offer advice and support.

ADP's iHCM cloud-based platform is accessible on any device, offering customers a comprehensive solution. This all-in-one platform complies with HMRC regulations and boasts a simple implementation process. Its user-friendly interface enables accurate payroll processing while facilitating HR management tasks such as time and attendance tracking and employee performance management.

Businesses choose ADP UK to access robust software that addresses payroll and HR needs and provides employees with professional training and development functions.

TopSource

TopSource Worldwide is highly recommended for small businesses expanding their operations globally. The standout feature of TopSource Worldwide is its international HR and payroll capabilities, making it an ideal provider for companies already operating globally or planning to expand into global markets. Their team of experts ensures compliance in over 150 countries, alleviating the complexities of managing global payroll.

In terms of features, TopSource covers all essential payroll requirements, including HMRC compliance, pension calculations, and end-of-year processing. Additionally, they provide customers with a range of reporting dashboards as standard, offering valuable insights. Their dedicated HR solution assists in completing employment contracts and managing employee benefits, further streamlining HR processes.

Factors to Consider When Implementing Payroll Software

Implementing a new payroll solution can be a significant undertaking for any business. Here are some factors to consider when implementing payroll software:

Implementation Timeframe

Your implementation timeframe will depend on the complexity of your payroll process and the size of your business. Setting realistic expectations for your implementation timeframe is vital to ensure a smooth transition.

User Training

User training is critical to the success of your payroll software implementation. Make sure that all users are trained on the software to ensure that they can use it effectively.

Data Migration

If you are migrating from an existing payroll software solution, ensure that your data is migrated correctly to ensure no disruptions to your payroll process.

Integrating Payroll Software with Other HR Software

Integrating your payroll software with other HR software solutions can help you streamline your HR processes and reduce the risk of errors. Here are some HR software solutions that you can integrate with your payroll software:

Rota Planner and Time and Attendance Software

Time and attendance software can be integrated with your payroll software to automate timekeeping and attendance tracking.

HR Management Software

HR management software can be integrated with your payroll software to streamline HR processes, such as performance management and employee onboarding.

Common Mistakes to Avoid When Choosing Payroll Software

When choosing payroll software, it's essential to avoid common mistakes that can lead to costly errors and inefficiencies. Here are some common mistakes to avoid:

Not Understanding Your Payroll Process

Before selecting payroll software, it's important to understand your payroll process and identify the areas where you need the most help.

Not Considering Compliance

Compliance is a critical factor when it comes to UK payroll software. Make sure that your software is compliant with all HMRC regulations.

Not Considering Integration

Integration is a crucial factor when selecting payroll software. Ensure your software can integrate with other HR software solutions you use.

Conclusion

Choosing the right payroll software is critical to the success of your business. By understanding the different types of payroll software, evaluating the key features, and considering pricing models, you can select a solution that meets your business needs. With the right payroll software, you can streamline your payroll process, reduce the risk of errors, and save time and money.

Choosing the Right Payroll Software for Your UK Business in 2024