Running payroll is one of those jobs that eats time and punishes mistakes. Get something wrong — a late RTI submission, a miscalculated National Insurance contribution — and HMRC will notice. Which makes it surprising that many small business owners don’t check what’s available for free before spending money.
There are genuinely good free options out there, recognised by HMRC and capable of handling the basics for most micro-businesses. Whether they’re right for you depends on how many people you pay, how complex your payroll is, and how much you want the software to handle on your behalf.
Is free payroll software actually worth using?
It depends on what you’re expecting from it.
Free payroll software in the UK falls into two camps. There’s HMRC’s own Basic PAYE Tools — free, functional, and pretty bare-bones. And then there are commercial products with free tiers, which tend to be more polished but push you toward a paid plan once you grow past their limits.
Neither is a trap. Both have real users running real businesses on them. But they do have genuine limitations, and it’s worth knowing what those are before you commit.
What free payroll tools generally do well: RTI submissions to HMRC (the legal requirement to report payroll data on or before each payday), PAYE and National Insurance calculations, auto-enrolment assessments, payslip generation, and P60s at year end.
What most of them skip: HR features, expense management, time tracking integrations, CIS deductions, half-decent mobile apps. If you need those, you’re heading toward paid software anyway — and our guide to the best payroll software for UK small businesses covers those options in full.
HMRC Basic PAYE Tools
The place most people start. HMRC’s own tool is free regardless of how many employees you have, handles RTI submissions, calculates PAYE and NI, and covers the end-of-year forms. The interface looks like it was designed around 2012 and hasn’t changed much — it’s not pretty — but it works.
Two things it doesn’t do: generate payslips, or manage auto-enrolment. You’ll need separate processes for both. For a sole trader paying themselves through PAYE, or a two-person operation where everyone understands the arrangement, those gaps might not matter much. For anyone who wants a more complete picture, they probably do.
Free for: any number of employees (best suited to under 10). Payslips: no. Auto-enrolment: no.
Employment Hero Payroll (formerly KeyPay)
The strongest free commercial option, and not particularly close. Employment Hero’s entry tier is free for unlimited employees, handles RTI submissions, runs PAYE and NI calculations, manages auto-enrolment including NEST integrations, and produces payslips. That’s a lot for nothing.
The software updates when PAYE thresholds and rates change at the start of the tax year, which matters more than it sounds — with Basic PAYE Tools, you’re doing some of that manually. The free plan is genuinely usable for small businesses, not a crippled demo. You only need the paid tiers if you want things like advanced pay conditions for shift workers, multiple PAYE schemes, or the broader HR suite.
The one honest downside: the interface isn’t as intuitive as some newer tools, and the help docs assume a bit of payroll knowledge. First-time payroll runners may find it less forgiving than they’d like.
Free for: unlimited employees. Payslips: yes. Auto-enrolment: yes.
Shape Payroll
Free for up to three employees. Shape is a modern cloud-based tool built around simplicity — the kind of software where you can get through a pay run without reading a manual. RTI submissions, PAYE, NI, payslips. It also shows clear indicators when submissions are due, which is useful if payroll isn’t something you think about often enough to remember deadlines unprompted.
Where it stands out is usability. For a sole trader paying themselves and one or two others, the interface is noticeably less overwhelming than the alternatives. If you’re new to running payroll and want to understand what’s happening as you go, rather than just clicking through screens and hoping for the best, Shape is probably the easiest place to start.
The three-employee cap is the obvious constraint. Hire a fourth person and you’re on a paid plan.
Free for: up to 3 employees. Payslips: yes. Auto-enrolment: yes.
IRIS Payroll Basics
Free for up to ten employees. IRIS is a long-established name in UK payroll — mainly known for software used by accountants — and Payroll Basics is their free entry-level option. It covers PAYE, NI, statutory payments (SSP, SMP, SPP), auto-enrolment, and RTI submissions.
There’s a catch worth knowing: payslips and reports are free for the first 30 days, then you pay for them separately unless you upgrade. That makes the free tier slightly less complete than it first appears. For just running and submitting payroll correctly, it does the job. If you already use IRIS for something else, or expect to grow into their paid products, it fits naturally.
Free for: up to 10 employees. Payslips: free for 30 days, then paid. Auto-enrolment: yes.
Primo Payroll
Free for up to ten employees, and worth knowing about mainly because of how it handles auto-enrolment. Rather than treating pension compliance as a separate step, Primo runs the assessment and contribution calculations in the background as you process payroll — communicating directly with your pension provider, handling employee communications, uploading contribution files to schemes like NEST and People’s Pension.
It’s a smaller, less widely known product, and outside of auto-enrolment the feature set is fairly standard. But if pensions administration is the bit of payroll you find most confusing or most likely to go wrong, the way Primo handles it is cleaner than most tools at this price point (which is free, so the bar isn’t exactly high).
Free for: up to 10 employees. Payslips: yes. Auto-enrolment: yes — and notably well-implemented.
Which one should you use?
For businesses with fewer than ten employees who are comfortable handling payslips separately and don’t need auto-enrolment automated, HMRC Basic PAYE Tools is free indefinitely and covers the legal minimum.
If you want payslips, auto-enrolment handled automatically, and no cap on employee numbers, Employment Hero is the most capable free option going. It’s not the most beginner-friendly, but it’s the one you’re least likely to outgrow quickly.
If you’re very small — yourself and one or two others — and payroll feels intimidating, Shape Payroll’s interface makes the whole thing considerably less stressful.
One thing worth checking before you commit to any of these: confirm the tool appears on HMRC’s current list of recognised payroll software. The list updates regularly, and only listed products can submit RTI data. Every tool above is currently on it, but it takes two minutes to verify and could save you a headache later.
When does it make sense to pay?
Free software works well when your payroll is straightforward. Variable hours, CIS deductions, expenses management, multiple pay schedules — those things get awkward quickly on free tiers, if they’re supported at all.
The rough threshold where paid software tends to start making financial sense: if you’re spending more than an hour or two on payroll each month, or if you’re regularly having to work around the tool’s limits, you’re probably past it. Entry-level paid options start from around £7–£20 a month for small teams.
For a full breakdown of what those paid options look like — pricing, features, and which suits which type of business — see our guide to the best payroll software for UK small businesses.
