Software comparison

Xero vs QuickBooks Payroll UK (2025/26)

Xero and QuickBooks are the two dominant cloud accounting and payroll platforms for UK small businesses. Both handle HMRC RTI submissions, auto-enrolment pension, and PAYE. The choice usually comes down to which accounting platform you already use: if you run your books on Xero, use Xero Payroll; if you are on QuickBooks, use QuickBooks Payroll. Switching accounting platforms to use a different payroll system is generally not worth the disruption for most small businesses.

UK scope: England, Scotland, Wales and Northern Ireland employer payroll planning for the 2025/26 tax year.

Sample total cost

£40,363

£3,364 per month on £35,000 salary

Employer NI

£4,500

15% above £5,000 secondary threshold (2025/26)

Pension + overheads

£863

Baseline employer pension plus configured overheads

Key assumptions — UK 2025/26

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

Both handle HMRC RTI, PAYE, NI, auto-enrolment pension and payslip distribution.
Xero Payroll integrates natively with Xero accounting — journal entries post automatically.
QuickBooks Payroll integrates natively with QuickBooks — preferred by QuickBooks accounting users.
Both are cloud-based and accessible from any device — no desktop software required.
Both integrate with NEST and The Peoples Pension for auto-enrolment.
Neither replaces calculating your employer cost at offer stage — do that first at /calculator.

Use the live tools

Calculate employer cost before choosing software Compare all payroll software Cost of employing by salary Employer NI by salary Auto-enrolment pension calculator

UK assumptions used

Employer NI

15% above £5,000 secondary threshold for 2025/26.

Auto-enrolment pension

Minimum employer contribution 3% on qualifying earnings.

Employment Allowance

Up to £10,500 relief in 2025/26 for eligible employers.

Official UK references

HMRC rates and thresholds Employment Allowance Pensions Regulator guidance Our methodology Our source list

Frequently asked questions

Is Xero or QuickBooks better for payroll in the UK?

For most small UK businesses, the better choice is whichever accounting platform you already use. Xero Payroll is better if you run your accounts on Xero — the native integration means payroll journals post automatically. QuickBooks Payroll is better if you are already on QuickBooks. Both provide HMRC-compliant payroll for UK businesses, and the day-to-day functionality is similar for businesses with under 20 employees.

Can I use Xero Payroll without Xero accounting?

Xero Payroll can technically be purchased without the full Xero accounting subscription, but most of its value comes from the native accounting integration. Running payroll on Xero while using a different bookkeeping tool would require manual journal entries, which eliminates the main efficiency benefit.

Which is cheaper — Xero or QuickBooks payroll?

Pricing is comparable at small headcounts. QuickBooks has marginally lower entry pricing for micro-businesses, while Xero may be slightly cheaper at 10–20 employee headcounts depending on the plan. Both offer promotional pricing and free trials. Compare current pricing on each provider's website, as rates change frequently.

UK coverage only. Last reviewed: 04 April 2026. Estimates use 2025/26 assumptions and are for planning, not legal or tax advice.