Sage Payroll UK vs Xero Payroll (UK)

Cloud payroll from Sage for UK small businesses, on HMRC's recognised list, up to 150 employees

Sage Payroll (listed by HMRC as Sage Business Cloud Payroll) is cloud payroll software from The Sage Group plc, a UK company based in Newcastle upon Tyne. Sage says it supports up to 150 employees, and it bills new UK customers per employee per month, with the first five employees included. Sage also sells the desktop Sage 50 Payroll, which is on HMRC's list as well.

Pros

• + On HMRC's recognised payroll software list
• + First five employees included; extra employees billed per month
• + Receives HMRC P6, P9 and RTI notices in the product
• + Desktop alternative from the same vendor (Sage 50 Payroll), also HMRC-recognised

Cons

• − Capped at 150 employees
• − Extra employees cost more on the higher plans (from £2.40, £4.40 or £6.40 a month each)
• − Payroll only: pair it with separate job-management software

Payroll built into Xero's UK accounting plans, with RTI, auto enrolment and a CIS add-on

Xero Payroll is part of Xero's UK accounting subscriptions, supplied by Xero (UK) Limited in Milton Keynes. It files RTI reports to HMRC after each pay run, handles auto enrolment, and sends payslips through the Xero Me app or by email, and tracks leave balances. Payroll is included for 1, 5 or 10 people on the Grow, Comprehensive and Ultimate plans, and charged per person on Ignite.

Pros

• + Payroll, accounting and invoicing in one Xero subscription
• + On HMRC's recognised payroll software list, with RTI filing after each pay run
• + Auto enrolment and employee payslips through the Xero Me app
• + Optional CIS add-on files monthly returns to HMRC

Cons

• − Only sold inside a Xero accounting plan, not as standalone payroll
• − Payroll cost rises per person above the plan's included headcount
• − CIS returns cost an extra £5 per month