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 admin 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 handling pension contributions. Get it wrong and HMRC will fine you. Get it right with the right software and it takes about 15 minutes a month.
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 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 dealing with CIS subcontractors alongside employees, proper payroll software is worth every penny.
What to Look for as a Tradesperson
- 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
- Auto-enrolment: pension contributions must be calculated and submitted automatically
- Payslip generation: employees are legally entitled to a payslip on or before every payday
- MTD readiness: CIS is being brought into Making Tax Digital 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
The most widely used payroll software in the UK. Handles everything a small trade business needs in one place without requiring additional software alongside it. RTI submissions, CIS deductions, auto-enrolment, payslips, P45s and P60s are all included on the entry plan.
- Cloud-based, run payroll from any device
- CIS support included on the Essentials plan at no extra cost
- UK-based phone support if something goes wrong
- Your accountant almost certainly knows Sage, making year-end simpler
2. Moneysoft Payroll Manager – Best for Budget-Conscious Businesses
At £82 per year for up to 20 employees, it’s the cheapest fully-featured paid payroll software in the UK, and includes CIS as standard.
3. Xero Payroll – Best if You’re Already Using Xero for Accounts
If your bookkeeping is in Xero, adding payroll to the same subscription is the simplest move. Everything integrates automatically, payroll costs flow into accounts without manual entries, and your accountant has full visibility in one place.
4. Employment Hero Payroll – Best Free Option
Genuinely free payroll with no employee cap and no time limit. RTI, auto-enrolment, payslips, and CIS are all included for free, the free tier is not a stripped-back trial with a hard sell behind it.
5. BrightPay – Best for Accountant-Managed Payroll
Popular with accountants managing payroll on behalf of small businesses. If your accountant runs your payroll, there’s a good chance they’re already using BrightPay. Annual licence model, typically undercuts Sage significantly on cost.
Quick Comparison
Payroll Is Only Part of the Picture
Getting payroll right 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 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 Teams →Frequently Asked Questions
Sage Payroll is the best overall option for most small trade businesses. It handles CIS deductions, RTI submissions, auto-enrolment, and payslips from £20/month for up to 10 employees, and most accountants already know how to work with it. If budget is the priority, Employment Hero Payroll offers genuinely free payroll that includes CIS, no employee cap and no time limit on the free plan.
Most, but not all. Sage Payroll, Employment Hero, Moneysoft, and Xero all handle CIS, including subcontractor verification, deductions at the correct rate (20% for verified, 30% for unverified), and monthly CIS300 returns to HMRC. BrightPay Cloud does not currently support CIS; check before committing to any tool if CIS is relevant to your business.
Yes. HMRC’s own Basic PAYE Tools is free but limited, no payslip generation and no CIS support. Employment Hero Payroll is the best free option for tradespeople: it includes CIS, RTI submissions, auto-enrolment, and payslips at no cost with no employee cap. For micro-businesses on a minimal budget, Moneysoft Payroll Manager at £82/year is also very competitive.
RTI stands for Real Time Information. It is the system HMRC uses to collect payroll data, you must submit a Full Payment Submission (FPS) to HMRC on or before every payday. Failure to submit on time results in automatic penalties starting at £100/month for businesses with up to 9 employees. All the payroll software options in this guide handle RTI submissions automatically.
Auto-enrolment applies from the date you employ your first eligible worker, someone aged 22 to State Pension age earning more than £10,000 per year. You have six weeks from that date to enrol them in a qualifying pension scheme. All payroll software listed here handles auto-enrolment calculations and contribution deductions. If you’re unsure whether you’re compliant, check The Pensions Regulator’s website for guidance specific to your staging date.
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