The true cost of payroll liability, line by line

When a payroll provider quotes you "0.9% of gross", that number is doing a lot of work. It may or may not include statutory liability transfer, RTI filing, auto-enrolment pension administration, same-day payment rails, or a named contact who answers the phone in the week a pay run goes wrong. Two providers quoting the same percentage can differ by five figures a year once those lines are priced properly.

Start by normalising the unit

Percentages of gross payroll scale with your wage bill, not with the work involved. A business with 80 people on £45k pays far more than one with 120 people on £26k, for an almost identical amount of processing. Before you compare anything, convert every quote to a cost per employee per pay run. It is the only unit that lets you see who is actually cheaper.

The lines that usually sit outside the headline

• Statutory liability transfer — whether PAYE and NIC exposure genuinely leaves your balance sheet, or is merely administered on your behalf.
• Pension administration — auto-enrolment assessment, opt-outs, re-enrolment cycles and scheme uploads.
• Payment rails — BACS is usually included; Faster Payments and same-day corrections often are not.
• Corrections and off-cycle runs — priced per run by most providers, and free by a few.
• Year-end — P60s, P11Ds and final submissions, sometimes billed as a separate annual fee.

What liability transfer actually means

This is where the market is at its least clear. A bureau processes your payroll but the liability stays with you: if a filing is late or a calculation is wrong, HMRC comes to your company. A full liability transfer moves that exposure to the provider, backed by their own indemnity. The second costs more, and for some businesses it is worth every penny — but you should never pay transfer pricing for bureau service.

If a provider cannot show you, in writing, exactly which statutory exposures sit with them after go-live, assume none of them do.

How we price it for clients

We take your last three pay runs, headcount by band, pension scheme details and the exceptions you deal with most often, then ask every relevant provider to price that exact shape. What comes back is a single table in the same unit, with the excluded lines listed underneath. Roughly one in six comparisons ends with us telling the client to stay where they are.