What is a managed payroll service? 

A managed payroll service is a third-party outsourcing solution that can take care of almost every aspect of your payroll, including:

  • Processing your payroll
  • Paying staff via BACS or Faster Payments
  • Calculating deductions and paying HMRC and pension providers
  • Reporting to HMRC
  • Managing pension auto-enrolment
  • Updating info on new starters and leavers
  • Issuing P60s and P45s.

As a client, all you need to do is submit your employee’s data and sign off the payroll each pay period.

UK business owner using payroll outsourcing service

Why are UK businesses using payroll outsourcing services?

Employers in the UK use managed payroll services both to avoid the downsides of running their own payroll and to enjoy the perks of delegating to an expert.

Other motivating factors include:

  • Ensuring compliancy with the 200+ pieces (and counting) of UK payroll legislation
  • Not having to maintain an in-house payroll team, infrastructure, and software
  • Finding it cheaper in the long-run to invest in a managed payroll solution.

How to choose your ideal managed payroll provider   

When you’re building a shortlist of managed payroll providers, you’ll want to be able to narrow down the contenders.

Use this list of questions and considerations to help identify the right payroll outsourcing solution for you.

  • Do they know how to run a payroll like yours?

    Perhaps this sounds like an obvious question, but it’s well worth asking – especially if your payroll requires specialist knowledge to run.

    For example, your provider will need industry-specific payroll knowledge to manage:

    • Local Government Pension Schemes (LGPS)
    • The Teachers’ Pension scheme
    • Expatriate payroll
    • The Construction Industry Scheme (CIS)
    • The NHS Pension Scheme
    • Tronc payments

    Some managed payroll providers may offer specialist payroll services focusing on a particular sector. For example, Dataplan Education manages payroll and pensions for the education sector, while IRIS International Payroll specialises in paying staff who are based overseas and Troncmasters provide a tronc + payroll option.


  • What added value services can they provide?

    If you’re opting to outsource your payroll, seek out providers that are going above and beyond purely functional processes.

    Alongside actually paying your people, some managed payroll providers also offer:

    • Secure cloud-based portals where you can easily upload employee data
    • Comprehensive reports so you have full visibility of your payroll process
    • Pension management service, including auto enrolment employee communications
    • A dedicated point of contact as part of a full ongoing support package.

    Explore the market to find beneficial features that can add value to a payroll service.

  • Do they have a secure online payroll system?

    Employee and payroll data is highly sensitive, so it’s worth investigating what security measures they have in place.

    You might want to check:

    • What kinds of technical platform and data security protocols are being used
    • Whether they provide a secure and encrypted portal through which you can transfer data
    • Whether they adhere to international payroll standards, such as ISO270001 and GDPR

    While solutions like IRIS Fully Managed Payroll employ these kinds of safety measures, it’s worth checking providers on your shortlist are taking data security seriously.

  • What is included in the per-payslip price?

    Many outsourced payroll services charge based on how many payslips you require running as part of your payroll.

    However, don’t forget to look beyond a provider’s promised ‘per-payslip’ cost; you might find essential payroll functions marketed as additional services, pushing up the final estimate.

    Get a clear outline of what a provider’s ‘per payslip’ fee covers, and look out for basic functions being marketed as paid for “added extras”, especially:

    • Producing P45s and P60s
    • Uploading pension files
    • Starters and leavers
    • Year-end filing.
  • What is the implementation process for their payroll services?

    As one of the UK’s leading providers of managed payroll services, we understand the concern around switching providers.

    • What the implementation process will look like, step by step
    • How long the process is expected to take
    • What systems or software, if any, will need installing
    • How they’re going to facilitate payroll during the transitional phase.


  • Is there any training and support?

    One of the benefits of using a fully managed payroll outsourcing service is you have a lot less to do with the process.

    However, even the most hands-off payroll service will require your input as an employer. There will still be systems and software you need to interact with, and your provider should offer you and your team the support necessary to complete your tasks.

    For example, if you’re going to be using an online client portal to submit employee data, you should receive training on how to access and make the most of that software.

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Featured Guide

A complete guide to managed payroll outsourcing solutions

Understand your managed payroll requirements and find an outsourced payroll solution that works.

Download our free guide and read about:

  • The pros and cons of outsourcing payroll
  • Comparing fully and part managed payroll services
  • How to identify when it’s time to switch providers
  • A plan of action for outsourcing your payroll
  • Our recommended managed payroll solutions.

Find a fully managed payroll service to suit your business

Decided to go with a fully managed payroll service? Find something that ticks all the boxes, and then some.

Alongside our best-in-show solution IRIS Fully Managed Payroll, businesses with more specialist requirements might be interested in:

  • IRIS International Payroll – A complete payroll service with native experts across 135 countries, ensuring your payroll is compliant wherever your people need paying.
  • Dataplan Education – When it comes to teachers’ pay scales, multiple job roles, and teachers’ pension schemes, our education payroll and pensions specialists have got you covered.
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