HR and payroll software guide for UK businesses

HR and payroll software allows HR teams to take care of HR tasks and payroll in one place, without switching between tools or using integrations. HR software helps teams manage employee data and take care of HR tasks like onboarding, time tracking, recruitment, and employee engagement. Payroll software automatically calculates wages, bonuses and tax deductions, and automates employee payments.

Integrated HR and payroll software allows businesses to combine these crucial operations in one place for a more efficient and effective way to make sure employees get paid correctly and compliantly. 

Integrated HR and payroll software means automatic data syncing and a smoother payroll process. You also unlock other benefits like greater accuracy, faster payroll cycles, and an improved employee experience. 

HR teams that invest in HR software for payroll and people management benefit from: 

Integrated HR and payroll software syncs data between both sides automatically, so you always have the latest salary, tax, and benefit information available. This reduces the time spent on data entry as it only needs to happen once. 

Combined payroll and HR systems share the same single source of truth. Instead of having to manually update records or make tax calculations, everything happens automatically — so there’s less room for human error. More accurate payroll runs leads to higher levels of trust, greater accuracy, and less time spent on dealing with payroll issues. 

With all your employee and payroll data in one place, it’s easier (and faster) to complete your payroll cycles. There’s no need to pull in data from different systems and check that it’s accurate, which saves you time every time you run payroll. 

Employers in the UK must use Pay As You Earn (PAYE) and HMRC’s Real Time Information (RTI) system, alongside other payroll requirements. On the HR side, the Working Time Regulations (1998) and Employment Rights Act (2005) introduce rules for employers to follow. Choosing a combined HR and payroll suite built for and updated in line with UK compliance means it’s easier to meet your legal obligations.

An integrated system for both HR and payroll leads to simplified and more accurate reporting. Your employee data is in one place, always up-to-date, and can be analysed and reported on without exporting first. 

Combining HR and payroll creates a better experience for employees. They can request time off, track their goals, and check their pay data from one trusted place instead of many. This reduces friction, improves engagement, and empowers employees with better access to their own data. 

Integrated payroll and HR software makes sense for businesses that want to simplify workflows and ensure data accuracy, but there are some situations where it’s especially relevant.

Combined HR and payroll software is ideal for:

• Growing businesses and ambitious scale-ups: Hire, onboard, and pay employees at scale from one platform.

• Teams with high data change frequency: Make changes once and have them appear across the entire system.

• Multi-location or shift-based teams: Adjust timesheets regularly and have the system automatically calculate pay, tax and hours worked.

• UK businesses that want to automate HR and payroll: Turn manual processes into automatic ones, leading to greater accuracy and efficiency.

“All employees have access to Personio and are also empowered to use the employee self-service tool. They request absences, keep in contact with managers and use public profiles to check in with colleagues… They get an overview of the entire company without needing multiple tools.“

Kristin Brandt

People & Culture Lead, LUSH

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A good HR and payroll system seamlessly connects your employee and pay data and makes running payroll a smoother, faster process. The right platform saves time, reduces errors, and creates a better experience with the help of these features and highlights:

• Real-time data sync: All your salary and absence data in one place.

• Mobile access to payslips: Employees can view and download their own payslips on demand.

• No manual imports: Data is updated automatically, with no need to manually make changes across systems.

• Smart alerts for data changes: A dedicated dashboard for recent updates.

• Intelligent filtering: Run specific checks in moments with smart filters.

• Automation: Workflows run automatically, saving you time and headspace.

• Easy data export: Get access to payroll-ready data to send to your accountant or upload to your payroll software.

• Integrations with popular payroll software: Sync data automatically with top UK payroll software like Xero, Sage 50, and PwC.

“Having automated HR processes makes a massive difference on what I do day-to-day. In people roles, we can often get bogged down in admin and not have time to do the stuff that’s more transformative and will actually add value to and help the business grow.“

Fran Newman

People Director, Deliciously Ella

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HR and payroll software pricing differs between providers and is influenced by features, access to technical help, multi-entity support, implementation, and ongoing costs. Sometimes combined software is more expensive than standalone systems, but the benefits often outweigh any initial higher costs.

When you compare the costs of different software options, consider: 

• Setup fees

• Training costs

• Monthly costs

• Extra payroll fees

Add all your expected costs together, then multiply those costs over how long you’ll use the software to calculate your total cost of ownership (TCO). Once you know the TCO it’s easier to compare between different integrated platforms, as well as the costs of investing in standalone HR systems and payroll software. 

To choose the right HR and payroll software, get clear on your needs and current obstacles, then seek out software that can remove roadblocks and simplify the process. It’s also crucial to consider data security and compliance with UK legislation.

Here’s what to consider when comparing combined HR and payroll solutions: 

• Ease of use: Is the software easy to use? Use your free trial period to explore the platform and make sure that it’s easy to navigate and use.

• Data security: Does the platform take data security seriously? Make sure that any vendor you choose has a high standard for data protection.

• Compliance: Is the software compliant with UK GDPR and other UK legislation? Check that your chosen platform is suitable for UK businesses.

• Scalability: Can the software scale with you as you grow? Look for a software provider that has a proven track record for supporting growing organisations. 

• Automation: Does the software automate what you need it to? Consider which aspects of HR and payroll you need to automate, then check that your chosen platform can achieve it.

• Integrations: Does the software integrate with your payroll or accounting software? Personio integrates with solutions like Xero, Sage 50, and PwC — ideal for organisations that don't want to switch payroll tools completely.

• Support and onboarding: Is there a complex onboarding process? Is support available? Ask your sales rep and seek out real user reviews to get a feel for what the onboarding experience will be like.

• Mobile access: Is the software mobile-friendly or is there a mobile app? Consider whether it’s easy for your HR team and employees to submit requests or view changes on the go.

The best HR and payroll software is the one that your team is most likely to use, so look for a solution that’s user-friendly, has the features you need, and simplifies the payroll process.

Businesses with employees in multiple countries or across multiple entities need software that can support the nuances and challenges that come with managing HR and payroll in different locations. Common issues include employees moving between locations, mapping payroll costs to the right business unit, and managing compliance for every entity. 

Standard HR and payroll software typically can’t manage multi-entity operations effectively, so it’s essential that you choose a vendor that can confidently handle the way your organisation works now and your growth plans for the future. Personio is built for medium and large businesses, and can accommodate multiple legal entities and workplaces with ease — including changing an employee’s legal entity and modifying the details of your entities within the system.

“Personio is nice, straightforward, and easy to use. When the system's too complex, people lose interest and they’re not going to use it. Personio has a good layout and is just very user-friendly.“

Nina Johansson

HR Manager, British Rowing

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There are several options for integrated HR and preliminary payroll software in the UK, but Personio combines a strong core HR offer with payroll preparation features to create one intelligent HR platform.

Personio includes:

Take care of payroll more efficiently and accurately with payroll preparation in Personio. Easily access the employee data you need, then prepare reports ready for the next stage of your payroll workflow.

• Interconnected salary and absence data

• Comprehensive summaries and change notifications

• Intelligent filtering

• One-click data export for accountants or payroll software

• HRIS with payroll integrations with popular software including Xero, Sage 50, and PwC

“We just export an Excel sheet to our external payroll company, which works for everybody“

Jack Wilson

Head of People, Cyted

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Record time accurately and use this to support your payroll preparations, with built-in time and attendance tracking. Get a clear picture of working hours, then use this data to make sure you always keep employee compensation accurate.

• Easy to use for employees

• Compliant with UK regulations and across borders

• Reliable data for salary and tax calculations

• Entrance App for in-person clock-ins

• Integrations with time tracking hardware like halion clock:it

Set your absence policies, automatically calculate leave balances, and manage time off. Keep track of absences across the business and have accurate data automatically reflected in your preliminary payroll. 

• Easy absence policy creation

• Self-service time-off requests and approvals

• Automated end-to-end absence management

• Reliable absence data for payroll calculations

Manage compensation review cycles, oversee your salary budget, and update salary data swiftly. Once your reviews are complete, Personio can automatically update salary and benefits data in your employee profiles ready for payroll preparation.

• Set up and monitor compensation review cycles

• Use access controls to ensure privacy

• Consolidate salary data in one click

• Set guidelines and stay within budget

• Reduced bias with salary bands, performance ratings, and comparison ratios

“Salary adjustments have become much easier. People managers can suggest, adjust and approve changes efficiently, across borders in multiple currencies, without additional emails or spreadsheets.“

Zeynep Spinelli

HR Generalist, EBARA

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Personio’s combination of preliminary payroll and core HR features helps HR teams in medium-to-large businesses speed up processes, streamline workflows, and take care of essential tasks in one environment designed with UK compliance needs in mind.

Preliminary payroll (or payroll preparation) is an essential pre-processing step where HR teams gather all the necessary data to run payroll — like salaries, hours worked and tax deductions. The data is then verified for accuracy before being sent to a payroll company or software for the next step in the payroll process.

Yes, HR software can integrate with payroll software. Some HR platforms (like Personio) include preliminary payroll as a feature, along with integrations for popular dedicated payroll tools like Sage 50, Xero, and PwC.

Integrated HR and payroll software is often a good choice for SMEs and medium businesses because it streamlines workflows and improves data accuracy. There’s also the opportunity to save money and simplify your tool stack by switching to a combined HR and SME payroll software. If you don't want to opt for a fully combined system, there's also the option to use HR software with payroll preparation and UK integrations — like Personio.

The best HR and payroll software depends on your requirements. For organisations with a UK-based workforce, Sage HR and Payroll is a popular choice. Rippling and HiBob are a good option for businesses with US-focused or more complex operations. If you’re a UK business looking for core HR and payroll preparation in one place, try Personio.

Cloud-based HR and payroll software is typically the better choice for most businesses. Cloud-based software can be accessed anywhere, has more flexible modules and add-ons, and is usually more affordable. On-premise HR and payroll software is a more traditional model that large enterprises may prefer if they have complex data security needs or already use a legacy product.

Modern HR and payroll software built for the UK market is designed to handle UK tax codes and will automatically calculate deductions based on the employee’s tax code.

The time it takes to switch HR and payroll systems depends on your current system and the one you’re moving to, along with how complex your data and needs are. It takes four weeks on average to switch to Personio and our implementation team is ready to help along the way.

“I really got the sense that our Implementation Manager really cared about the bespoke elements for us, what we needed and how we needed it to work. She’d go away and explore some options and come back with how other organisations do it. I haven’t had a bad customer experience - every single person I've met at Personio has been brilliant.“

Tom Asher

Director of Operations, Anne Frank Trust UK

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When you use preliminary payroll or integrations with payroll software providers, Personio can automatically sync data like employee name, employee code, IBAN, address, and salary information.

Yes, cloud payroll is safe to use. HR and payroll software providers invest in data security measures to keep sensitive employee and payroll data safe and secure.

Personio has native payroll integrations with providers including Xero and Sage 50. If you have an active account with Personio and one of these software providers you can enable the integration and data will flow seamlessly between the two tools.

The cost of HR and payroll software depends on your needs, how many employees you have, and the total cost of ownership (TCO). Some HR and payroll software is priced per-employee on a monthly basis, while others have an annual fee and the option to customise your plan to suit your specific requirements.