1. What is payroll outsourcing?

Payroll outsourcing is when a company hires an external provider to handle payroll and pension processing, dealing with HMRC and much more instead of managing it in-house.

2. Why do businesses outsource payroll?

Businesses outsource payroll to:

• Ensure compliance with HMRC regulations
• Reduce administrative workload
• Improve accuracy and avoid payroll errors
• Maintain data security and confidentiality
• Save costs compared to an in-house payroll team

3. What services do payroll providers offer?

Payroll outsourcing providers typically offer:

• Payroll processing (weekly, fortnightly, or monthly)
• PAYE (Pay As You Earn) tax calculations and deductions
• Statutory Pay Calculations
• National Insurance (NI) calculations
• RTI (Real Time Information) submissions to HMRC
• Auto-enrolment for workplace pensions
• Payslip generation (via online portals)
• Year-end reporting (P60s)

4. Is outsourcing payroll compliant with UK laws?

Yes, as long as the provider follows HMRC regulations, GDPR data protection laws, and employment legislation. Employers remain legally responsible for ensuring payroll is handled correctly.

5. How much does payroll outsourcing cost in the UK?

Costs vary based on the number of employees and services required. Typical pricing is:

• Per-employee pricing (e.g., £3–£10 per employee per month)
• Fixed monthly fees for small businesses
• Custom pricing for larger organisations

6. Can payroll outsourcing help with HMRC compliance?

Yes, payroll providers ensure compliance with HMRC’s RTI reporting, tax codes, and statutory payments (e.g., sick pay, maternity pay). They also help avoid penalties for late or incorrect filings.

7. What should I consider when choosing a payroll provider?

Key factors include:

• Pricing structure and transparency
• Data security and GDPR compliance
• Integration with accounting software (e.g., Xero, QuickBooks)
• Customer support availability

8. Can payroll providers handle pension auto-enrolment?

Yes, most payroll outsourcing services handle pension contributions, enrolment, and reporting for schemes like Nest, The People’s Pension, and other providers.

9. How long does it take to switch to an outsourced payroll provider?

It can take around 1 week, depending on the size of your business and the complexity of your payroll. The provider will require previous payroll records, employee details, and HMRC information before this can happen.

10. Can I still access payroll data if I outsource?

Yes, most providers offer online portals where employers and employees can access payslips, reports, and tax documents anytime.