Best Payroll Software for UK Trade Businesses 2026
The first time you run payroll as a tradesperson is one of those moments where you realise just how much paperwork comes with taking on staff. You're not just paying someone a wage — you're calculating tax, deducting National Insurance, submitting reports to HMRC on or before every payday, and making sure pension contributions are handled correctly. Get it wrong and HMRC will fine you. Get it right and it takes about 15 minutes a month.
The difference between those two outcomes is usually whether you've got the right payroll software in place.
This guide covers the best payroll software options for UK tradespeople in 2026 — with particular focus on which ones handle the Construction Industry Scheme (CIS), because that's the thing most generic payroll guides miss entirely.
Do You Actually Need Payroll Software?
Technically no — HMRC provides its own free tool called Basic PAYE Tools which handles RTI submissions for businesses with very small teams. For a sole trader paying one person a monthly salary with no complications, it's adequate.
In practice though, most trade businesses outgrow it quickly. It doesn't generate payslips automatically, it has no CIS functionality, and the interface is basic. Once you're paying more than two or three people — or you're dealing with CIS subcontractors alongside employees — proper payroll software is worth every penny.
One Glasgow-based workshop manager summed it up well: "I tried doing it manually for the first three months. I made two mistakes, one of which cost me a penalty. The software paid for itself before the end of the first quarter."
What to Look For as a Tradesperson
Before comparing specific tools, here's what actually matters for a trade business:
- HMRC RTI compliance — non-negotiable. Every option listed here is on HMRC's recognised software list
- CIS support — essential if you pay subcontractors for construction work. Not all payroll software includes this — check before you buy
- Auto-enrolment — pension contributions must be calculated and submitted automatically
- Payslip generation — employees are legally entitled to a payslip on or before every payday
- Making Tax Digital readiness — from April 2026, CIS is being brought into MTD for Income Tax, requiring digital records and quarterly reporting
The Best Payroll Software for UK Trade Businesses in 2026
1. Sage Payroll — Best Overall for Small Trade Businesses
Sage is the most widely used payroll software in the UK and for good reason — it handles everything a small trade business needs in one place without requiring any other software alongside it. RTI submissions, CIS deductions, auto-enrolment, payslips, P45s and P60s are all included on the entry plan.
Pricing: From £20/month for up to 10 employees (Essentials plan). Sage regularly offers 90% off for the first three months.
CIS: Included on the Essentials plan at no extra cost.
Best for: Trade businesses with 1–10 employees that want a reliable, standalone cloud payroll solution with proper CIS support and UK-based phone support if something goes wrong.
Worth knowing: Your accountant almost certainly knows Sage already, which makes year-end much simpler.
2. Moneysoft Payroll Manager — Best for Budget-Conscious Businesses
If cost is the priority, Moneysoft is the standout option. At £82 per year for up to 20 employees it's the cheapest fully-featured paid payroll software available in the UK — and it includes CIS as standard.
Pricing: £82/year for up to 20 employees. That's less than two months of Sage Essentials.
CIS: Included on all tiers.
Best for: Small trade businesses on a tight budget that want proper CIS handling at the lowest possible annual cost.
Worth knowing: It's Windows desktop only — no cloud, no mobile access. If you need to run payroll on a Mac or from your phone, look elsewhere.
3. Xero Payroll — Best if You're Already Using Xero for Accounts
If your bookkeeping is already in Xero, adding payroll to the same subscription is the simplest move. Everything integrates automatically — payroll costs flow into your accounts without manual journal entries and your accountant has full visibility in one place.
Pricing: From £1.50 per employee per month as an add-on to existing Xero plans.
CIS: Supported on Xero's accounting plans — handles subcontractor verification, deductions, and monthly CIS returns.
Best for: Trade businesses already on Xero who want payroll and accounting in a single platform.
Worth knowing: If you're not already using Xero for accounting, the combined cost is higher than Sage Payroll standalone.
4. Employment Hero Payroll — Best Free Option
For a sole trader employing one or two people who wants to keep costs at zero, Employment Hero Payroll offers genuinely free payroll with no employee cap and no time limit. RTI, auto-enrolment, and payslips are all included for free.
Pricing: Free for payroll. HR features available as a paid add-on from £4 per employee per month.
CIS: Included at no extra cost — one of very few free options that handles CIS properly.
Best for: Trade businesses just starting out with their first employee who want to run compliant payroll at zero cost while the business finds its feet.
Worth knowing: The free tier is genuinely functional — it's not a stripped-back trial with a hard sell behind it.
5. BrightPay — Best for Accountant-Managed Payroll
BrightPay is popular with accountants managing payroll on behalf of small businesses. If your accountant runs your payroll for you rather than you doing it in-house, there's a good chance they're already using BrightPay.
Pricing: Annual licence model — costs vary by employee count but typically undercuts Sage significantly.
CIS: Supported on desktop. Important note: BrightPay Cloud does not currently support CIS — a separate product is in development but has no confirmed release date. If you need cloud-based CIS, use Sage or Employment Hero instead.
Best for: Businesses whose accountant manages payroll, or those comfortable with desktop software and wanting to keep annual costs predictable.
Quick Comparison: Which One Should You Choose?
- Just starting out, 1–2 employees, tight budget → Employment Hero Payroll (free) or Moneysoft (£82/year)
- 1–10 employees, want reliable cloud payroll with CIS → Sage Payroll (£20/month)
- Already on Xero for accounts → Xero Payroll
- Accountant manages your payroll → Ask them — they'll likely already have a preference
- Need CIS on a cloud platform → Sage or Employment Hero (BrightPay Cloud not yet CIS-ready)
A Note on IRIS Payroll Basics
If you've been using IRIS Payroll Basics — the free desktop tool that's been popular with micro-businesses for years — you need to act now. It will not receive legislative updates after the 2025/26 tax year, which means RTI submissions will become non-compliant from April 2026 onwards. Migrate to one of the options above before the end of the current tax year.
Don't Forget: Payroll Is Only Part of the Picture
Getting payroll right is essential — but it only covers how you pay people. Managing the actual work — who's on which job, whether it's been completed, what needs invoicing — is a separate challenge entirely once you've got staff in the field.
Tradify handles the operational side: job scheduling, quoting, invoicing, and team management all in one app. Pair it with solid payroll software and you've got a proper system for running a trade business with a team behind you.
Try Tradify Free — Built for Trade Businesses With TeamsUse code PARTNER for 50% off your first 3 months.
The Bottom Line
For most small trade businesses taking on their first employees, Sage Payroll at £20/month is the safest, most straightforward choice — it handles CIS, it's cloud-based, and your accountant will know how to work with it. If budget is tight, Employment Hero's free tier is genuinely capable and includes CIS at no cost.
Whatever you choose, make sure it's on HMRC's recognised software list and handles CIS if there's any chance you'll be working with subcontractors. Those two filters alone will rule out most of the options that could cause you problems down the line.
If you've just taken on your first member of staff, our guide to how to take on your first employee as a tradesperson covers everything else you need to have in place before day one. And if you're using subcontractors rather than employees, read our guide to managing subcontractors and staying legal under CIS next.
Affiliate disclosure: Some links on this page are affiliate links. If you sign up through them we may earn a commission at no extra cost to you. We only recommend tools we'd genuinely point a tradesperson towards.