UK · Payroll & compliance
Xero Payroll Pricing
Xero Payroll does not have a standalone price. That is the first thing you need to understand before you open a comparison spreadsheet.
To use payroll, you need a Xero accounting subscription: the plan you choose determines how many employees are included, what per-employee rate applies, and whether you are also paying for features you will never use.
The September 2024 plan restructure made this more complicated. Payroll was removed from the default Ignite bundle and turned into an optional add-on at that tier.
At every other plan level, payroll is included from a set employee count.
The result is a pricing stack where your real monthly bill is plan fee plus per-employee overage plus occasional payment processing fees. If you are evaluating Xero on payroll cost alone, the headline plan prices will mislead you.
This page does the maths at every relevant employee count, names the crossover points, and gives you the honest total-cost picture.
What you actually pay for Xero Payroll
Xero Payroll is priced as a layer on top of a Xero accounting plan, not a standalone product. The bill is plan fee plus per-employee charge plus any payment-fee overage, and the answer changes sharply at the 25-employee crossover. Here's what surfaces at contract stage.
| Published | Xero Payroll cannot be bought standalone. You subscribe to a Xero accounting plan, then add payrolled employees on top. Four April 2026 plans: Ignite £16/mo (payroll is an add-on, no employees included, £1.50 per payrolled employee), Grow £37/mo (1 employee included, £1.50 each additional), Comprehensive £50/mo (5 employees included, £1.50 each additional), Ultimate £65/mo (10 employees included, £1.00 each additional). Hard cap is 200 employees per organisation. |
|---|---|
| Common extras | Online bill and payroll payments are billed at £0.20 per payment beyond the plan allowance. Ignite includes none; Grow includes 5; Comprehensive 10; Ultimate 15. A 50-employee payrun on Grow adds 45 x £0.20 = £9 per run. The September 2024 restructure also de-bundled payroll from Ignite, so businesses on that tier pay the £1.50-per-employee add-on rate from the first head. |
| Pass-through | HMRC RTI submissions for PAYE are statutory and pass through at no markup. Pension regulator submissions for auto-enrolment carry no Xero uplift. Bank BACS or Faster Payments fees themselves remain a third-party charge billed by your bank, separate from Xero's online-payment fee. |
| Negotiable | The Comprehensive-to-Ultimate crossover sits at 25 employees, where both plans cost £80/mo. Above that headcount, moving to Ultimate is a documented saving (£12.50/mo at 50 employees), and it is the strongest plan-side lever. Annual prepay and the wider Xero accounting bundle (apps + reporting tiers) are where accountants and multi-entity buyers typically negotiate, since payroll alone offers little discretionary discount. |
Xero Payroll Pricing: Quick Summary
- Entry point: £17.50/mo (Ignite £16 + £1.50 for 1 employee) or £37/mo (Grow, 1 employee included)
- Best value for 1–5 employees: Grow (£37–£43/mo); payroll included from 1 employee
- Best value for 6–24 employees: Comprehensive (£50 + £1.50/additional); 5 included employees reduce overage
- Best value for 25+ employees: Ultimate (£65 + £1.00/additional); lower per-employee rate makes it cheaper from employee 25 onwards
- Hidden cost to watch: Online payment processing at £0.20 per payment beyond plan allowance
- Hard cap: 200 employees maximum per Xero organisation
- Avoid if: You want payroll-only pricing, or you have more than 200 employees, or you have no use for Xero accounting
What Does Xero Payroll Cost in the UK?
Xero Payroll is not priced like BrightPay or Sage Payroll, where you buy a payroll licence and optionally add accounting integration. With Xero, you buy the accounting plan and payroll is layered on top.
That means your payroll cost is inseparable from your accounting cost, and most businesses evaluating Xero for payroll are already running, or evaluating, Xero for books.
The total monthly cost formula is: base plan fee + per-employee overage + any payment processing fees.
Xero Payroll Pricing at Each Plan Tier
All prices are in GBP per month, excluding VAT, at standard rates. Xero runs promotional discounts for new customers (80% off for six months as of April 2026; do not budget on the promotional rate).
| Plan | Base Price/mo | Payroll Employees Included | Per Additional Employee |
|------|-------------|------------------|----------------|
| Ignite | £16 | 0 (optional add-on) | £1.50 |
| Grow | £37 | 1 | £1.50 |
| Comprehensive | £50 | 5 | £1.50 |
| Ultimate | £65 | 10 | £1.00 |
Source: xero.com/uk/pricing-plans/, verified April 2026.
The Ignite tier deserves specific attention. After September 2024, payroll on Ignite is an optional add-on rather than a default inclusion.
A sole trader or micro-employer who wants only Xero accounting plus payroll for one person pays £16 + £1.50 = £17.50/mo.
That is technically the cheapest total Xero payroll bill possible, but Ignite also limits you to 20 invoices and 10 bills per month, which for many businesses means Ignite is the wrong accounting plan regardless of payroll.
What Is Included in Xero Payroll at Each Tier
Payroll functionality does not vary by plan. Whether you are on Grow or Ultimate, you get the same payroll feature set:
- RTI submission to HMRC
- auto-enrolment pension management
- P60 and payslip generation
- CIS support for subcontractors
- and direct bank feed integration with Xero accounting
The plan tier only affects how many employees are included in the base price.
The features that do differ by accounting plan tier are relevant only if you use Xero beyond payroll: cash flow forecasting extends from 30 days (Grow) to 180 days (Ultimate), and analytics depth increases.
If you are here purely to evaluate payroll cost, those differences do not affect your payroll bill.
How Xero Payroll Compares at Different Employee Counts
This is where the maths earns its keep. We calculated the total monthly Xero cost at each standard employee count for each plan, assuming all employees are payrolled.
| Employees | Ignite | Grow | Comprehensive | Ultimate |
|-----------|--------|------|----------|----------|
| 1 | £17.50 | £37.00 | £50.00 | £65.00 |
| 5 | £23.50 | £43.00 | £50.00 | £65.00 |
| 10 | £31.00 | £50.50 | £57.50 | £65.00 |
| 15 | £38.50 | £58.00 | £65.00 | £65.00 |
| 20 | £46.00 | £65.50 | £72.50 | £65.00 |
| 25 | £53.50 | £73.00 | £80.00 | £80.00 |
| 50 | £91.00 | £109.50 | £117.50 | £105.00 |
All prices GBP/mo excluding VAT. Ignite per-employee: £1.50.
Grow per-employee above 1: £1.50. Comprehensive per-employee above 5: £1.50. Ultimate per-employee above 10: £1.00.
Three crossover points stand out.
First, Comprehensive overtakes Grow at six employees: Grow + 5 extra at £1.50 = £44.50 versus Comprehensive at £50, so Grow is still cheaper through five employees beyond the included one, and Comprehensive only becomes competitively priced when you are paying for enough extras to justify the step up.
Second, Ultimate matches Comprehensive exactly at 25 employees (both £80/mo); above that, Ultimate’s £1.00 per-employee rate saves you money.
Third, at 50 employees, Ultimate (£105) is meaningfully cheaper than Comprehensive (£117.50), saving £12.50/mo or £150/year.
If your payroll headcount is stable at or below 10 employees, Grow is the cleaner plan. If you are at 11–24 employees, Comprehensive gives you the better per-employee economics despite the higher base.
Above 25 employees, Ultimate is the rational choice.
What Are the Hidden and Add-On Costs of Xero Payroll?
The plan fee and per-employee charge are visible. The following are less so.
Per-Employee Charges
The £1.50 per additional employee (or £1.00 on Ultimate) is charged per person paid each month, not per employee on your books. If you run payroll for a seasonal worker for two months and then remove them, you are charged only for those two months.
Xero will not lock you into a permanent per-employee commitment.
The definition of “person paid” includes any employee you run payroll for in that billing cycle, so a business that regularly adds and removes staff should track headcount carefully to avoid bill surprises.
Plan Upgrade Triggers
Payroll-specific overage is one upgrade trigger, but you should watch for others.
Ignite’s invoice cap (20 per month) and bill cap (10 per month) will push you to Grow long before payroll headcount becomes an issue for most businesses.
If you hit those limits, your accounting plan cost jumps from £16 to £37 regardless of payroll.
Similarly, if you add Expenses (available from Grow) for employee expense management, additional users beyond the plan’s included count will increase your monthly bill.
Third-Party Integration Costs
The less visible payroll-related cost is payment processing.
Xero’s online bill and payroll payment feature, which lets you pay employees directly from Xero via BACS or Faster Payments, comes with a per-payment fee beyond the plan allowance.
Grow includes 5 online payments per month; Comprehensive includes 10; Ultimate includes 15. Additional payments cost £0.20 each.
For a business paying 50 employees monthly via Xero’s payment feature: on Grow, you use 5 free and pay for 45 at £0.20 = £9.00 extra per payrun. On Ultimate, you use 15 free and pay for 35 at £0.20 = £7.00 extra per payrun.
At 12 payruns per year, that is £108 and £84 respectively in payment fees alone: invisible in any plan headline comparison.
If you use a third-party payroll payment provider or handle payments outside Xero, these fees do not apply.
How Does Xero Payroll Pricing Compare Against Alternatives?
Xero Payroll is not the cheapest way to run UK payroll. It is competitively priced for businesses that are already committed to Xero accounting, where the incremental cost of adding payroll is genuinely low.
For businesses evaluating payroll as a standalone purchase, the comparison looks different.
Xero vs BrightPay on Price
BrightPay is a dedicated payroll tool, not an accounting suite.
BrightPay Connect (cloud version) is licensed annually, typically starting around £159/year for the employer licence covering up to a set employee count, with per-employee charges above that.
For 1–10 employees, BrightPay is almost always cheaper than Xero on payroll cost alone. The trade-off is manual accounting integration: BrightPay does not post journals to your ledger automatically the way Xero payroll does.
If you run your accounts in Xero, that manual reconciliation cost is real.
We cover the full trade-offs on the Xero vs BrightPay comparison page.
Xero vs Sage Payroll on Price
Sage 50 Payroll and Sage Payroll (cloud) are both dedicated payroll products with their own pricing structures.
Sage Payroll starts at lower per-employee costs than Xero for small teams, but requires separate accounting software unless you are also on a Sage accounting plan.
For businesses already on Sage accounts, the Sage payroll integration argument mirrors Xero’s; the integration premium is justified by automation.
For businesses not on Sage, the pricing comparison favours Sage Payroll’s standalone rates.
We cover the full trade-offs on the Xero vs Sage Payroll comparison page.
Is Xero Payroll Worth the Price?
The honest answer depends entirely on whether you are already paying for Xero accounting.
If you are a Xero accounting customer running Grow or above, the marginal cost of adding payroll is low: you are paying £37–£65/mo already, and adding one to ten employees comes at no additional charge.
For those businesses, Xero Payroll is not a payroll purchasing decision at all; it is a feature activation.
The question is only whether Xero’s payroll functionality is sufficient for your needs (it is for most sub-50-employee UK businesses) and whether the per-employee charges above your included allowance are acceptable compared to a dedicated tool.
If you are not a Xero customer and you are evaluating Xero primarily for payroll, the case is weaker.
You are committing to an accounting subscription at £37–£65/mo to access payroll, and dedicated alternatives like BrightPay or Sage Payroll provide equivalent HMRC compliance at lower cost if payroll is your only need.
The accounting integration that justifies Xero’s pricing premium only delivers value if you actually use Xero’s accounting features.
The 200-employee ceiling is the other constraint worth naming. Any business planning to scale beyond 200 employees needs a migration plan. That threshold can arrive faster than expected in growth-stage businesses, and migrating payroll mid-cycle is operationally disruptive.
Xero is transparent about the cap; factor it into your three-year planning.
Frequently Asked Questions About Xero Payroll Pricing
Can I buy Xero Payroll without a Xero accounting subscription?
No. Xero Payroll is a feature within Xero’s accounting plans, not a standalone product.
You must subscribe to a Xero accounting plan (Ignite, Grow, Comprehensive, or Ultimate) to access payroll. On Ignite, payroll is an optional add-on at £1.50 per employee per month with no employees included.
On Grow, Comprehensive, and Ultimate, payroll is bundled with a set number of employees included in the base price.
Does Xero offer an annual pricing discount on payroll?
Xero’s plans are billed monthly and auto-renew monthly. There is no standard annual pricing discount.
Xero periodically runs introductory offers for new customers; the current offer (April 2026) is 80% off for six months. This discount applies to the base plan price and not to per-employee add-on charges.
Xero confirms the same on its own pricing page: the offer “does not apply to any additional charges for add-ons, usage and payment fees”, so the per-employee charges and the per-payment processing fees stay at standard rates throughout the promotional window. (Details last checked: 2026-06-30; source: xero.com/uk/pricing-plans.)
Never build a multi-year payroll budget on a promotional introductory rate.
What is the cheapest way to use Xero Payroll for a single employee?
The cheapest technically possible option is Ignite (£16/mo) plus one employee at £1.50, totalling £17.50/mo. However, Ignite limits you to 20 invoices and 10 bills per month, which will be insufficient for most businesses.
Grow (£37/mo) includes one payroll employee in the base price and has no invoice or bill caps, making it the more practical entry point for businesses that need both payroll and accounting functionality without transaction limits.
When does it make sense to upgrade from Grow to Comprehensive for payroll?
Purely on payroll cost, Comprehensive (£50/mo, 5 employees included) becomes cheaper than Grow once you have eight or more employees. At seven employees on Grow, your total is £37 + £9 (6 additional × £1.50) = £46/mo versus £50 for Comprehensive.
Broad overtakes Grow on total cost at eight employees: Grow = £47.50, Comprehensive = £50 (Grow is still cheaper at eight).
At nine employees: Grow = £49, Comprehensive = £50. At ten employees: Grow = £50.50, Comprehensive = £57.50.
Wait: Comprehensive becomes the rational choice when you have more than ten employees and its five included employees reduce your overage enough to offset the higher base.
Are there any setup or onboarding fees for Xero Payroll?
No setup fees apply directly from Xero. You can self-configure Xero Payroll within your existing subscription.
Activation is deliberately light-touch: Xero asks you to “complete a short form to see if Xero Payroll suits your business needs, then add it to your subscription”, after which the work is admin and correct data entry rather than a separate implementation project. (Details last checked: 2026-06-30; source: central.xero.com.)
However, if you use an accountant or Xero partner to migrate your payroll data or set up your payroll scheme, their professional fees are a real onboarding cost. For businesses migrating from another payroll provider, data migration complexity varies.
Budget for implementation time even if no direct Xero fee applies.
What happens to my payroll if I downgrade my Xero plan?
Xero allows downgrades to a less expensive plan one month after upgrading.
If you downgrade and the new plan includes fewer payroll employees than you currently pay, you will incur per-employee charges for the additional headcount under the new plan’s terms.
Xero will apply the new plan’s per-employee rate. You should run a payroll cost calculation before any plan downgrade to avoid unexpected bill increases.
Methodology and Disclosure
All pricing was verified directly from xero.com/uk/pricing-plans/ in April 2026. Employee cost calculations use the stated per-employee rates at each plan tier. Whichapp is editorially independent and has no commercial relationship with Xero.
We do not receive referral fees for Xero plan sign-ups.
Competitor pricing for BrightPay and Sage Payroll is based on prior research and publicly available pricing; we recommend verifying current competitor pricing independently before a final purchasing decision, as SMB payroll pricing changes regularly.
All prices exclude VAT.