Single employee payroll
Best payroll software for 1 employee UK (2026/27)
Running payroll for a single employee in the UK requires HMRC RTI submissions, PAYE calculations, auto-enrolment pension handling, and payslip generation. You have three main options: HMRC's free Basic PAYE Tools (functional but limited), a low-cost cloud payroll platform like Xero, QuickBooks or FreeAgent, or a standalone payroll-specific tool like Sage Payroll. For a single employee, HMRC Basic PAYE Tools is free and HMRC-compliant, but most small business owners prefer paid software for its payslip quality, pension provider integration, and accountant access.
UK scope: England, Scotland, Wales and Northern Ireland employer payroll planning for the 2026/27 tax year.
Sample total cost
£30,713
£2,559 per month on £30,000 salary
Employer NI
£0
15% above £5,000 secondary threshold (2026/27)
Pension + overheads
£713
Baseline employer pension plus configured overheads
Key assumptions — UK 2026/27
Employer NI: 15% on earnings above the £5,000 secondary threshold
Employer pension: minimum 3% on qualifying earnings £6,240–£50,270
Employment Allowance: up to £10,500 off the NI bill for eligible employers
Worked examples: £30k salary → £34,464/yr · £35k → £40,363/yr · £50k → £58,063/yr
What this page helps you check
- HMRC Basic PAYE Tools: free, HMRC-compliant, handles RTI — but limited payslips, no pension auto-enrolment integration.
- Xero Payroll (Starter): from ~£7/mo — best for Xero accounting users, includes app-based payslips and NEST integration.
- QuickBooks Payroll: from ~£6/mo — best for QuickBooks accounting users, full HMRC RTI and pension support.
- FreeAgent: from £3.50/mo (NatWest/RBS customers may get free access) — good for freelancers and micro-businesses.
- All paid options include auto-enrolment pension handling — critical once your employee earns above £10,000/year.
- Your first employee's total cost is more than just salary — see the employer cost calculator before making offers.
UK assumptions used
Employer NI
15% above £5,000 secondary threshold for 2026/27.
Auto-enrolment pension
Minimum employer contribution 3% on qualifying earnings.
Employment Allowance
Up to £10,500 relief in 2026/27 for eligible employers.
Frequently asked questions
Do I need payroll software for one employee?
You are not required to use commercial payroll software — HMRC's free Basic PAYE Tools handles RTI submissions for up to 9 employees. However, most employers with even one employee find that a paid cloud platform (Xero, QuickBooks, FreeAgent) is worth the monthly cost for better payslips, automatic pension provider integration, and accountant-friendly access. From around £6–£7 per month for a single employee, the administrative benefit usually outweighs the cost.
Does my single employee need auto-enrolment pension?
Yes, if they are aged 22–66 and earn more than £10,000 per year. You are legally required to automatically enrol them into a qualifying pension scheme and contribute at least 3% of their qualifying earnings (between £6,240 and £50,270). HMRC Basic PAYE Tools does not manage pension provider submissions — paid payroll software handles this automatically.
What does it cost to employ one person in the UK?
Beyond the salary, you pay employer NI (15% on earnings above £5,000 in 2026/27) and minimum pension (3% on qualifying earnings). At a £30,000 salary, the total employer cost is approximately £34,464 per year — £4,464 above headline salary. Use the employer cost calculator for any specific salary.
UK coverage only. Last reviewed: 18 August 2026. Estimates use 2026/27 assumptions and are for planning, not legal or tax advice.
Ready to run payroll for this hire? Sage Payroll handles RTI submissions, auto-enrolment and payslips — HMRC-recognised and built for UK small businesses. Try Sage Payroll →
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