If you’re searching for free payroll software UK because you’ve just taken on your first employee, the honest answer is: several genuinely free, HMRC-recognised options exist, but most of them stop being free the moment you cross an employee threshold or need auto-enrolment handled automatically. HMRC’s own Basic PAYE Tools remains free and unlimited in time, but it caps out under 10 employees and doesn’t run auto-enrolment for you. A newer crop of products, including Employment Hero and Collegia FreePayroll, now offer free tiers with no employee cap at all.
This guide runs through what’s actually free right now, where each option’s limits kick in, and the compliance basics (RTI, Employment Allowance, auto-enrolment, payslips) you need regardless of which one you pick.
Is free payroll software for UK businesses actually free?
Mostly yes, but “free” covers three genuinely different things, and it’s worth knowing which one you’re looking at before you commit hours of setup time to a tool.
Some products, like HMRC’s own Basic PAYE Tools, are permanently free with a hard employee cap. Others, like Employment Hero’s UK free tier, are free with no employee limit but hold back more advanced features behind a paid upgrade. A few products marketed as free are really 30-day trials in disguise, so it’s worth checking the small print before you build a payroll process around one.
The one non-negotiable requirement across every option: it must appear on HMRC’s recognised payroll software list. Using anything that isn’t recognised risks incorrect RTI submissions and potential penalties, so check the current list on GOV.UK before choosing.
HMRC recognised payroll software: what that actually means
HMRC recognition means the software has been tested and approved to correctly calculate PAYE and National Insurance and to submit Real Time Information (RTI) directly to HMRC in the format it requires. Every business running payroll must submit RTI reports, so this isn’t optional; it’s the baseline for legal compliance regardless of which tool you use.
Full Payment Submissions (FPS) report each employee’s pay, tax and National Insurance on or before every payday. Employer Payment Summaries (EPS) report anything that reduces what you owe HMRC, such as statutory pay recovered or the Employment Allowance you’re claiming. Every product covered below handles both.
HMRC Basic PAYE Tools: the honest limits
HMRC Basic PAYE Tools (BPT) is the government’s own free desktop application, and it’s the natural starting point for anyone searching for free payroll software UK. It’s genuinely free, with no time limit and no catch beyond its built-in restrictions.
What it does well
- Calculates PAYE, National Insurance, and statutory payment amounts correctly, since it’s built and maintained by HMRC directly.
- Submits FPS and EPS reports to HMRC in real time.
- Records employee starter and leaver details.
- Generates payslips, according to GOV.UK’s own guidance, though several independent reviews describe the output as extremely basic compared with commercial software.
Where it stops being enough
- The 10-employee cap. BPT is built for businesses with fewer than 10 employees, and HMRC explicitly recommends commercial software once you exceed that.
- No auto-enrolment functionality. This is the gap that catches people out most. BPT does not assess staff for auto-enrolment or calculate pension contributions; you’d need to manage that separately, typically through The Pensions Regulator’s own free auto-enrolment toolkit alongside BPT, which involves a fair amount of manual cross-checking.
- Desktop-only, no cloud access. It runs locally on Windows, Mac or Linux with manual data entry each payroll run, and doesn’t integrate with accounting software.
- Not designed for agents or bookkeepers. If you’re running payroll for multiple clients, this isn’t the tool.
For a genuinely tiny business, one or two employees, straightforward pay, no pension duties yet, BPT does the job at zero cost. Anything more complex and you’ll feel the limitations quickly.
Free payroll software for 1 employee: does size matter here?
If you’re only running payroll for a single employee, most free tiers on the market comfortably cover you, since the employee caps that catch out growing businesses (typically 5, 9 or 10 employees) sit well above your headcount. The real question at one employee usually isn’t capacity, it’s whether you need auto-enrolment support from day one.
Under UK law, most employees earning above £10,000 a year (the automatic enrolment earnings trigger for 2026/27) must be automatically enrolled into a workplace pension, so even a single-employee business often needs this handled properly. If that’s you, prioritise a tool that includes auto-enrolment rather than defaulting to Basic PAYE Tools purely because it’s the most familiar name.
Best free payroll software UK: the current options compared
Here’s how the genuinely free, no-time-limit options stack up as things stand.
HMRC Basic PAYE Tools
Free, permanent, no employee limit stated beyond the practical 10-employee recommendation. No auto-enrolment, desktop only, basic payslip output. Best for the smallest, simplest payroll with no pension duties in the immediate picture.
Employment Hero (free tier)
Employment Hero’s UK free payroll plan is notable for having no employee cap at all, a genuine outlier among free products. It covers core PAYE calculations, payslips, RTI filing and, according to current provider information, auto-enrolment support. Paid tiers add broader HR functionality like contracts, leave management and onboarding workflows.
Collegia FreePayroll
Another no-cap, no-time-limit option that’s gained attention through 2026 for covering RTI, payslips, P45s, P60s and auto-enrolment, including submissions to major pension providers such as NEST, The People’s Pension and NOW: Pensions, all at zero ongoing cost.
1st Money Free+
Capped at around nine employees, but well-regarded for covering core payroll plus support for multiple worker types within that limit. A reasonable middle option if you’re confident you won’t grow past single digits soon.
Primo Payroll and other capped free tiers
Several other providers, including Primo Payroll, sit on HMRC’s recognised list with free tiers capped at five to 10 employees, similar in shape to 1st Money. Worth comparing if a specific feature elsewhere doesn’t fit your needs.
A genuine freshness note: IRIS Payroll Basics, long a familiar free name in this space, is being phased out after the 2025/26 tax year according to current provider guidance, so it’s not a sensible choice to start fresh with now even though older reviews still mention it. If you’ve seen it recommended elsewhere, check the date on that advice.
Payroll software for small business UK: when to stop using free tools
Free payroll makes sense while your team is small and your pay is straightforward. It stops making sense once any of the following applies:
- You’re approaching or past the employee cap on whichever free tier you’ve chosen.
- You need multiple pay schedules, complex overtime rules, or different entitlement structures across staff.
- Auto-enrolment administration is eating real time each month because your free tool doesn’t handle it end to end.
- You want the payroll data to flow directly into your accounting software rather than being entered twice.
At that point, paid payroll software (from roughly £20 a month upward for a small team, according to current market pricing) usually pays for itself quickly in time saved, particularly around auto-enrolment and year-end reporting.
Auto-enrolment duties: what applies regardless of which tool you use
Whatever software you choose, your legal duties as an employer don’t change. For the 2026/27 tax year, the automatic enrolment earnings trigger remains £10,000 a year, the lower earnings limit for qualifying earnings is £6,240, and the upper earnings limit is £50,270, all unchanged from 2025/26.
Staff earning above the £10,000 trigger who meet the age criteria must be automatically enrolled into a qualifying pension scheme, with minimum employer and employee contributions calculated on qualifying earnings between the lower and upper limits. Employers must also complete a re-declaration of compliance with The Pensions Regulator, both at initial staging and roughly every three years at re-enrolment.
If your chosen free software doesn’t handle this automatically, factor in the extra admin time, and check The Pensions Regulator’s own guidance directly rather than assuming your tool has it covered.
The current Employment Allowance, and how it interacts with payroll software
Employment Allowance lets eligible employers reduce their annual employer Class 1 National Insurance bill by up to £10,500 for the 2026/27 tax year, the same level that’s applied since it more than doubled from £5,000 in April 2025.
You claim it through your payroll software by submitting an Employer Payment Summary, and it’s applied against your NI liability as it falls due rather than paid as a lump sum. There’s one exception worth knowing if you’re a single-director limited company: if you’re the only director and the only person on the payroll liable for employer NI, you generally cannot claim the allowance. Most other small employers with genuine staff can.
Every free payroll tool covered here supports claiming Employment Allowance through the standard EPS submission, so this isn’t a differentiator between products, but it’s easy to forget to actually claim it each year, so it’s worth double checking your software has it switched on.
Payslip requirements: what your software actually has to produce
Under Section 8 of the Employment Rights Act 1996, you’re legally required to give every employee and worker an itemised payslip on or before payday. At minimum, it must show:
- Gross pay, before any deductions.
- Net pay, what actually lands in their account.
- Each deduction listed separately, such as Income Tax, National Insurance, pension contributions and student loan repayments, rather than one combined figure.
- The number of hours worked, where pay varies according to hours, a requirement that’s applied since April 2019.
Digital payslips are legally valid, provided staff can actually access them. This is precisely where Basic PAYE Tools’ basic payslip output can fall short of what growing businesses expect, so if payslip presentation matters to your team, it’s worth checking a sample output before committing to any free tool.
FAQs
What is the best free payroll software for a UK small business?
It depends mainly on your employee count and whether you need auto-enrolment handled automatically. HMRC’s Basic PAYE Tools suits the smallest, simplest setups under 10 employees with no pension duties, while Employment Hero and Collegia FreePayroll suit growing businesses since neither imposes an employee cap.
Is HMRC Basic PAYE Tools genuinely free forever?
Yes, it’s provided free by HMRC with no time limit, but it’s restricted to businesses with fewer than 10 employees and doesn’t include auto-enrolment functionality. You’ll need The Pensions Regulator’s separate toolkit alongside it if pension duties apply.
Can I run payroll for one employee completely free?
Yes, most free payroll tools comfortably cover a single employee, since the caps that matter (typically five to nine employees) sit well above that. The main thing to check is whether the tool handles auto-enrolment, since most employees earning above £10,000 a year must be enrolled into a workplace pension.
Does free payroll software submit RTI to HMRC automatically?
Yes, provided it’s on HMRC’s recognised software list, every option covered here submits Full Payment Submissions and Employer Payment Summaries directly to HMRC in real time. Using software that isn’t HMRC-recognised risks incorrect submissions and potential penalties.
What’s the current Employment Allowance for small employers?
The Employment Allowance is £10,500 for the 2026/27 tax year, the same level as 2025/26, reducing your employer Class 1 National Insurance liability. Single-director companies with no other employees on the payroll generally can’t claim it.
Does free payroll software handle auto-enrolment?
It varies significantly. HMRC Basic PAYE Tools does not, requiring separate manual administration, while newer free tiers like Employment Hero and Collegia FreePayroll include auto-enrolment support, including pension provider submissions, as standard.
What must a payslip legally include in the UK?
By law, every payslip must show gross pay, net pay, and each deduction (Income Tax, National Insurance, pension, student loan) listed separately rather than combined. Where pay varies by hours worked, the specific hours must also be shown, a requirement in place since April 2019.
When should I move from free payroll software to a paid option?
The usual triggers are approaching your free tool’s employee cap, needing multiple pay schedules or complex entitlement rules, or spending significant time manually managing auto-enrolment that a paid tool would automate. Paid payroll software typically starts around £20 a month for a small team, according to current market pricing.
