What does a payroll bureau do, and when does it make sense?

A payroll bureau is an outside provider that runs some or all of your payroll. It checks your payroll data, calculates pay and deductions, makes or supports payments, and files returns with HMRC and pension providers. It makes sense when payroll needs more time, checking or cover than your own team can give. The legal responsibility for PAYE stays with you.

What is a payroll bureau?

A payroll bureau is a business you pay to run payroll for you. GOV.UK describes two ways to operate PAYE:

• pay a payroll provider, "for example, a bureau or accountant", to do it for you
• do it yourself using payroll software

A bureau is one form of the first option.

Providers use the terms "bureau", "managed payroll" and "outsourced payroll" in different ways. Some use "bureau" for a service that handles part of the process alongside your own team. Others use it for the whole process, from checking to filing. Rather than relying on the label, ask each provider to set out in writing what it will do and what you will still do.

What does a payroll bureau do each pay period?

A bureau turns your payroll information into accurate pay, payments and reports. The exact scope depends on the provider and your agreement, but it can include:

• checking the information you send, such as starters, leavers, hours and pay changes
• calculating pay and deductions, including Income Tax, National Insurance, student loan repayments and pension contributions
• handling statutory payments such as Statutory Sick Pay or Statutory Maternity Pay
• producing payslips
• reporting pay and deductions to HMRC in a Full Payment Submission (FPS), which must be sent on or before payday
• sending contribution information to pension providers
• making, or supporting, payments to employees

Some providers also offer extra support. GOV.UK gives keeping employee records, providing payslips and making payments to HMRC as examples. Year-end work, benefits reporting (P11Ds) and auto-enrolment support are other common additions. Whatever the scope, a good bureau runs a set of checks before every payroll run before anything is paid.

What stays with the employer?

The legal responsibility stays with you. GOV.UK is direct about this: "As an employer, you're legally responsible for completing all PAYE tasks - even if you pay someone else to do them." You are also responsible for collecting and keeping your employees' records, which the provider needs in order to run payroll.

In practice, a bureau works from the information you give it. If a leaver's last day, a pay rise or a period of sickness reaches the bureau late, the payroll will need correcting later. A bureau changes who does the work, not who is accountable for it. That is why a clear timetable for sending information, and a clear sign-off step before processing, matter on both sides.

Workplace pensions work the same way. The Pensions Regulator says employers must monitor their staff's ages and earnings every time they pay them, and pay the contributions due every time they run payroll. A bureau can do much of this work, but the duties remain yours.

Payroll bureau or in-house payroll?

The choice usually comes down to capacity, checking and cover.

Questions to weigh before you decide

• Capacity: how much of your HR or finance team's time does payroll take each month, and what else could that time be used for?
• Checking: is each payroll checked against your own policies and current UK legislation before it's processed, by someone other than the person who prepared it?
• Accuracy of payments: how confident are you that every payment is right first time, and how quickly are mistakes put right?
• HMRC and pension filings: are returns always sent on time, and does anyone else understand how they're done?
• Cover: what happens to payday if the one person who knows your payroll is on holiday or off sick?

When does a payroll bureau make sense?

A payroll bureau tends to make sense when payroll has outgrown the time or checking your team can give it. Common situations include:

• Capacity: payroll is taking more of your team's time than you want it to.
• Cover: payroll depends on one person, so holidays or absence put payday at risk.
• Checking: you want each payroll checked, with a clear sign-off, before it's processed.
• Complexity: you have frequent starters and leavers, variable pay, statutory payments or pension changes to manage.
• Filing and year-end: you want someone else to handle HMRC and pension submissions, year-end and benefits reporting.

When is in-house payroll still the right choice?

In-house payroll can suit employers with a stable, straightforward payroll and people who have the time and knowledge to run it, check it and keep up with changes. If you already have strong payroll capability, you might use a bureau only for specific tasks such as year-end, or not at all. Which route is right depends on your organisation. If you're leaning towards a bureau, our guide on how to choose a payroll bureau in the UK sets out the questions to ask.

How VIPs, Vision ERP's managed payroll service, works

VIPs (Vision Integrated Payroll Service) is Vision ERP's managed payroll bureau service for organisations in all sectors across the UK.

• Who checks it: a dedicated team of CIPP-experienced staff validates and interrogates each payroll, and checks it against your organisation's own policies and UK legislation.
• Sign-off: you receive a sign-off report before anything is processed.
• Processing and filing: we then process the payroll, make sure payments are accurate, and file returns with HMRC and pension providers.
• Pay cycles: we support all pay cycles, mainly monthly, and work to your payroll timetable.
• Systems: payroll runs on Unit4 HR & Payroll. If your organisation doesn't use Unit4 Payroll, we can run it on our own systems.
• Additional services: P11Ds, year-end and auto-enrolment.
• Payday and afterwards:
  • On payday we take your phone calls.
  • We handle corrections and supplementary runs, Faster Payments and reconciliations, with printed payslips if needed.
• Queries: queries are logged through our service management portal, which supports monthly SLA reporting.
• Quality: Vision ERP holds ISO 9001 certification for quality management.

See how VIPs works

Frequently asked questions

Is the employer still responsible if a payroll bureau runs payroll?
Yes. GOV.UK says employers are legally responsible for completing all PAYE tasks, even if they pay someone else to do them.

Does a payroll bureau send reports to HMRC?
Usually, depending on the agreed scope. Pay and deductions are reported to HMRC in a Full Payment Submission, sent on or before payday.

Do I need payroll software if I use a bureau?
You need payroll software if you run payroll yourself. If a bureau runs it for you, the bureau provides the software, so ask which system it uses and what access you'll have.

What will a payroll bureau need from me?
Your employees' details and any changes each pay period, such as starters, leavers, hours, pay changes and absences, sent in line with an agreed timetable.

Is a payroll bureau the same as outsourced payroll?
The terms overlap, and providers use them differently. Ask each provider to confirm its scope in writing.

Talk to us

Weighing up a payroll bureau against running payroll in-house? See how VIPs works, or contact Vision ERP to talk it through.