Does Xero have a payroll system?
Yes. Xero Payroll is built into Xero UK and included with the Growing (30/month) and Premium (47/month) pricing plans. The Starter plan doesn’t include payroll. If you’re on Starter and need payroll, you’ll need to upgrade.
Xero Payroll handles:
- Pay runs – weekly, fortnightly, four-weekly, or monthly pay periods
- PAYE and National Insurance calculations
- RTI submissions to HMRC (Full Payment Submissions and Employer Payment Summaries)
- Payslips – generated automatically and available for employees to view online
- Workplace pension auto-enrolment and pension contributions
- Student loan and postgraduate loan deductions
- CIS (Construction Industry Scheme) deductions for subcontractors
- P45s, P60s, and P11Ds
Everything posts to your Xero accounts automatically. Run a pay run and Xero creates the journal entries for gross pay, PAYE, NICs, pension contributions, and net pay. No double entry, no reconciliation headaches.
Can I do my own payroll on Xero?
You can. Xero’s payroll process is designed so business owners can run it themselves. You add employees, enter their salary or hourly rate, set the pay period, and run the pay run. Xero Payroll calculates the deductions, generates the payslips, and files your RTI submission to HMRC.
That said, payroll has more pitfalls than most people expect. Getting a tax code wrong, missing an auto-enrolment date, or filing late all carry HMRC penalties. If you have more than a handful of staff – or if you have part-time workers, variable hours, or CIS subcontractors – it’s worth having your accountant manage it.
Is Xero pay run being discontinued?
No. Xero Pay Run (the feature within Xero Payroll) is not being discontinued. There was some confusion when Xero ended their standalone Xero Payroll app in some markets, but in the UK, Xero Payroll remains fully supported and integrated into Xero accounting. It’s the same system – you access pay runs from within Xero, not from a separate app.
What our payroll service includes
We manage the full payroll process for you:
- Setup – We add your employees to Xero Payroll, enter their tax codes, salary details, pension membership, and any recurring deductions. If you’re moving from another payroll software, we migrate the year-to-date figures so calculations stay accurate.
- Pay runs – Each pay period, we process the pay run in Xero. For salaried staff this is mostly automated. For hourly workers, we enter timesheets or pull them from a time-tracking app.
- HMRC filing – We submit your FPS (Full Payment Submission) to HMRC on or before each pay day. At year-end, we file your final FPS and EPS.
- Payslips – Xero generates payslips automatically. Employees can view them through Xero Me (the self-service app) or we email them as PDFs.
- Pension admin – We handle auto-enrolment, calculate pension contributions, and submit data to your pension provider (NEST, NOW: Pensions, or others).
- Year-end – P60s for every employee, P11D forms for benefits in kind, and your final HMRC submissions. All from within Xero.
Xero Payroll pricing
Xero Payroll is included in the Growing and Premium pricing plans at no extra cost per employee. If you’re on the Starter plan, you can add payroll for 5/month.
Our payroll management fee depends on how many employees you have and your pay period frequency. As a guide:
- 1-5 employees, monthly pay run: from 50/month
- 6-15 employees: from 100/month
- 16-50 employees: from 200/month
CIS, multiple pay frequencies, or complex deductions may adjust the price. We quote a fixed monthly fee so you know exactly what you’re paying.
Does HMRC recognise Xero?
Yes. Xero is HMRC-recognised for RTI payroll submissions. It’s also on the approved list for Making Tax Digital. When we submit your payroll through Xero, it goes directly to HMRC in real-time – compliant, on time, and with a digital audit trail.
Why use an accountant for payroll?
Running your own payroll saves money, but it costs time and carries risk. Common mistakes we see from DIY payroll:
- Wrong tax codes applied after a new starter joins mid-year
- Missed auto-enrolment deadlines (The Pensions Regulator can fine you)
- Incorrect holiday pay calculations for zero-hours and part-time workers
- Late RTI submissions (HMRC charges 100-400 per month depending on company size)
- CIS deductions calculated incorrectly or not reported
We automate what can be automated in Xero Payroll and handle the rest. Your cloud-based payroll data is always accessible, and you don’t need to worry about keeping up with HMRC changes – that’s our job.
Get started
Call us on 0161 832 4451 or book a free consultation. We’ll review your current payroll setup, tell you whether Xero Payroll suits your business, and give you a fixed monthly quote.
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