Choosing payroll software for a payroll bureau

Q: Which bureau features save the most time?

Client approval workflow. Variable pay, starters and leavers come in through a client portal with a cut off, and the client approves the draft before the FPS is sent. Statutory pay calculations. For 2026 to 2027 HMRC gives Statutory Sick Pay as £123.25 a week or 80% of average weekly earnings, whichever is lower, paid once an employee has been sick for at least one full working day. The software should apply this without manual overrides. Journals and payment files. Posting the payroll into each client's ledger and producing bank payment files. See payroll journals. Records and audit trail. HMRC requires payroll records for 3 years from the end of the tax year, and can charge up to £3,000 if full records are not kept. The system should keep reports, payments and tax code notices for each client. Year end tools. Final FPS, P60 production and support for week 53.

A practice running client payrolls needs HMRC recognised payroll software that handles many PAYE schemes at once, sends Full Payment Submissions on or before each payday, assesses and reports auto enrolment every pay period, and is ready for mandatory payrolling of benefits from 6 April 2027. Payslip delivery, employee portals and the data protection terms with the software provider are the other deciding points.

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What does HMRC actually require of payroll software?

HMRC’s guidance is that an employer running payroll must use software that reports PAYE information online, unless exempt. HMRC publishes a list of recognised free and paid products, but it states that it cannot recommend one product over another and is not responsible for problems with software you have bought. Recognition means the product can file Real Time Information (RTI) returns; it says nothing about whether the product suits a bureau.

HMRC itself warns that some software will not let you produce payslips, record pension deductions, make pension payments, pay different people over different periods (for example weekly and monthly), or send an Employer Payment Summary (EPS) or Earlier Year Update (EYU). A bureau needs all of these. HMRC’s free list, including Basic PAYE Tools, is recognised for businesses with fewer than 10 employees, which rules it out as the main platform for a practice with a varied client base.

The legal duties stay with each client as employer, as explained in payroll bureau compliance, but the software is where most bureau errors start or are caught.

Which RTI features does a bureau need?

The core timetable from HMRC’s running payroll guidance is:

send the FPS on or before the employees’ payday, entering the usual payday even if pay goes out early;
send an EPS by the 19th of the following tax month to claim reductions such as statutory pay recovery;
pay HMRC by the 22nd, or the 19th if paying by post.

For a bureau the question is how the software handles this across dozens of schemes. Look for a dashboard showing every client’s next payday and submission status, bulk FPS and EPS submission, and clear handling of the exceptions HMRC allows: an additional FPS for an ad hoc payment, a corrected FPS when something changes, and the late reporting reason codes HMRC lists for permitted late filing. HMRC’s late filing penalties run per PAYE scheme and depend on headcount, from £100 a month for 1 to 9 employees up to £400 for 250 or more, so a missed client run is costly.

Ask how the product deals with payroll IDs when you take on a client mid year. HMRC says some software will not let you continue with the same employee payroll IDs used in other software; if so you must set the payroll ID changed indicator on the FPS, or the PAYE bill may be miscalculated and records duplicated. See changing payroll provider mid year.

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How should the software handle auto enrolment?

The Pensions Regulator (TPR) describes auto enrolment as a continuous duty. The employer must monitor ages and earnings every time staff are paid. TPR’s current guidance says anyone aged 22 up to state pension age earning over £10,000 a year (£833 a month or £192 a week) must be put into a scheme, and staff must be enrolled and written to within six weeks of meeting the criteria. Staff aged 16 to 74 earning at least £520 a month or £120 a week who ask to join must be put in within a month, with employer contributions.

Bureau grade software should therefore:

assess every worker on every run and generate the statutory letters;
process opt outs, stop deductions and refund within the one month TPR requires;
send contribution files to the main providers directly rather than by manual upload;
keep the records TPR requires for six years, and opt out requests for four years;
flag the three yearly re enrolment date and support the re declaration of compliance.

The first declaration of compliance must be made within five calendar months after the duties start date, and TPR lets an agent such as an accountant complete it. TPR lists incorrect earnings thresholds and contribution errors for staff on maternity pay among the common mistakes, so test those scenarios before choosing.

What changes for payrolled benefits from April 2027?

HMRC has confirmed that mandatory payrolling of benefits in kind starts in April 2027, moved from April 2026 to give more time to prepare. Employers will not need to register to payroll the mandatory benefits: company cars, car fuel, vans, van fuel and private medical benefits. Employment related loans and accommodation stay outside the mandatory regime but can be payrolled voluntarily. The registration service for voluntary payrolling of those benefits from April 2027 opens in November 2026, with a deadline of 5 April 2027.

HMRC says the mandatory service uses extra RTI data fields that the current voluntary service does not, and that Class 1A National Insurance moves to real time. In July 2027 employers will still pay Class 1A for 2026 to 2027 benefits under the P11D system while starting real time Class 1A, a one off overlap. HMRC also says that errors related to mandatory payrolling in 2027 to 2028 RTI returns will not attract inaccuracy penalties unless deliberate, though late filing and payment penalties still apply.

For 2026 to 2027 only benefits registered for payrolling before 6 April 2026 can be payrolled, and living accommodation and beneficial loans cannot be. Ask each vendor for its April 2027 release plan, how it values cars and recalculates the taxable amount when a benefit changes or an employee leaves, and how it applies HMRC’s rule that tax deducted cannot exceed 50% of pay. More on the rules is in payrolling benefits in kind.

What should payslips and employee portals do?

Employers must give employees and workers a payslip on or before payday, printed or electronic. It must show gross pay, deductions that vary, net pay and the hours worked where pay varies with time worked. Fixed deductions can instead go in a separate statement, issued before the first payslip and updated every year. P60s are due by 31 May and a P45 must be given to a leaver.

A portal that publishes payslips, P60s and P45s saves postage and queries, but check:

how leavers keep access to their documents after leaving;
whether the client approves the payroll before payslips are released;
how personal data is secured and where it is hosted.

When the practice processes payroll for a client, it is normally a processor for that client. Article 28(2) of the UK GDPR says a processor must not engage another processor without the controller’s prior specific or general written authorisation, and Article 28(1) requires the controller to use only processors giving sufficient guarantees. The engagement letter should therefore authorise the software provider as a sub processor.

Which bureau features save the most time?

Client approval workflow. Variable pay, starters and leavers come in through a client portal with a cut off, and the client approves the draft before the FPS is sent.
Statutory pay calculations. For 2026 to 2027 HMRC gives Statutory Sick Pay as £123.25 a week or 80% of average weekly earnings, whichever is lower, paid once an employee has been sick for at least one full working day. The software should apply this without manual overrides.
Journals and payment files. Posting the payroll into each client’s ledger and producing bank payment files. See payroll journals.
Records and audit trail. HMRC requires payroll records for 3 years from the end of the tax year, and can charge up to £3,000 if full records are not kept. The system should keep reports, payments and tax code notices for each client.
Year end tools. Final FPS, P60 production and support for week 53.

How should a practice compare products?

Illustration only. A practice with 60 payroll clients scores three shortlisted products from 1 to 5:

Requirement	Product A	Product B	Product C
Multi client dashboard and bulk RTI	5	3	4
Auto enrolment assessment and provider files	4	4	2
April 2027 payrolled benefits plan	4	2	3
Employee portal and client approvals	3	5	3
Data protection terms	4	4	4

Product A scores 20, B 18 and C 16. Run two or three real client payrolls in parallel during a trial before committing, and weigh licence cost per payslip against staff time saved. The wider practice systems question is covered in practice management software, and charging for the service in pricing payroll services.

What mistakes do bureaux make when choosing?

Choosing on licence price alone, then rekeying pension data because there is no direct provider link.
Moving clients mid year without testing how year to date figures and payroll IDs come across.
Assuming the product will handle payrolled benefits from April 2027 without seeing the vendor’s plan.
Keeping clients on a free tool once headcount reaches 10 or more.
Not authorising the software provider as a sub processor in client engagement letters.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.