The True Cost Of An Internal Payroll Function

Breaking down the true costs of maintaining an internal payroll resource, a few considerations will include:

  • competitive annual salaries for your in-house payroll team
  • one-off payroll software implementation costs, plus annual licensing, maintenance, and training
  • print and distribution costs for employee payslips
  • manual administrative compliance with HMRC and other regulators


At a glance, we can already see that maintaining an internal payroll team and the associated activities can be as much as a six-figure annual investment.

Compare those costs to a third-party payroll provider where the cost can often be just a few pounds per head to access specialist expertise, it’s an easy decision to make choosing a third party payroll company to manage your requirements.

The in-house skills gap in payroll services


In recent years, digital transformation all across the Finance business function and advancing tax legislation has completely changed the role scope of Payroll services. This has left a substantial skills gap that’s set to grow further between now and 2030.

In a recent YouGov study, almost half of the respondents in SME organisations said that outsourcing their payroll delivered better results, while 44% of those surveyed said there were efficiency gains to outsourcing. Over a third of respondents said they lacked qualified staff in-house.

Meet regulatory requirements with outsourced payroll


Whilst payroll is a required business process that doesn’t add tangible financial value to business performance, it’s a high-value, expert function that services your team and protects the business from exposure to financial risk.

As regulation and pension reforms continue to advance and more and more payroll processes are digitised, it makes sense to trust the payroll experts. Not only will your exposure to reputational risk be reduced, you also be certain that regulatory compliance is met head-on via specialist payroll software, and avoid hefty fines from the tax man.