Why “Can I Do My Own Payroll” Is the Wrong Question to Ask

Thinking about handling payroll yourself to save money or stay in control? You’re not alone.

“Can I do my own payroll?” and “Can you do payroll without an accountant?” are questions many UK business owners ask.

The short answer is yes—but the real question isn’t whether you can—it’s whether you should.

So in this post I’ll walk you through what’s involved, when it’s safe to DIY, and when outsourcing is the smarter move for your business. Let’s break it down.

Quick Answer: Can I Do My Own Payroll?

Yes, legally you can run your own payroll in the UK without an accountant. But that doesn’t mean it’s simple or advisable—especially if you’re hiring your first employee.

HMRC expects you to:

• Register as an employer through the HMRC online portal
• Set up and run PAYE (Pay As You Earn)
• Deduct the right income tax, National Insurance, student loan repayments, etc.
• Handle holiday pay, sick pay, maternity pay and pensions correctly
• Report payments to HMRC on or before every payday
• Provide employees with payslips and P60s
• Keep detailed records for at least 3 years.

It’s doable. But it’s also fiddly, high-risk admin that can easily go wrong.

What Makes Payroll Tricky?

Many founders assume payroll is just about calculating wages and pressing “pay.” But it’s actually a legal compliance task that HMRC takes very seriously.

Because you’re not just affecting cash flow.

If you mess up someone’s pay, you’re potentially affecting a range of other things – their ability to pay their bills on time, their credit score, maybe even their mortgage application.

Here’s what typically trips up DIY founders:

• Benefits in kind (e.g., free lunch, travel cards, or mobile bills) can count as taxable perks if not reported correctly.
• Auto-enrolment pensions kick in for most employees earning over £10,000 a year—but age and other criteria apply too. Check the full rules on The Pensions Regulator’s website.
• Real-time information (RTI) submissions must be sent to HMRC every time you run payroll—not monthly or annually.
• Leaving processes—you must issue a P45 and final payment correctly.

And the frustrating part? Even small, well-meaning gestures—like buying Friday lunch or covering a phone bill—can trigger tax consequences if you don’t report them properly.

Can You Do Payroll Without an Accountant?

Technically, yes. You don’t need to be a qualified accountant to run payroll.

And many founders use payroll software like:

• HMRC’s Basic PAYE Tools (free, but limited)
• QuickBooks Payroll, Xero Payroll, or BrightPay (more features, easier reporting)

But software only helps if you know what you’re doing. It won’t catch:

• Incorrect starter or leaver forms
• Missing student loan notifications
• Holiday pay miscalculations
• Taxable vs non-taxable perks

If you’re determined to DIY though just be prepared to read HMRC’s employer guidance closely and dedicate some hours every month.

You’ll need to stay on top of constant rule changes and keep records tidy in case of inspection.

Why We Recommend Outsourcing Payroll (Even If You’re Small)

Unless your business is a payroll bureau, I recommend outsourcing payroll as soon as you take on your first real employee.

Here’s why:

• It’s affordable: Many payroll providers charge £3-£5 per payslip or a flat monthly fee. Easy to budget for.
• It reduces risk: You’re far less likely to underpay tax, miss a pension deadline or mess up employee pay.
• It saves time: You avoid hours of admin and stress, especially when someone joins or leaves.

As I always say to anyone when it comes to this topic – you haven’t set up your business to do a load of admin on the ins and outs of payroll admin.

Plus, a good payroll provider becomes your go-to when you’re unsure about benefits, staff expenses, or how to reward your team without triggering a tax bill.

There Is Still Payroll Admin That Will Fall To You

Even if you outsource, you still need to:

• Gather employee details and submit them to your provider (e.g., National Insurance number, tax code, starter form)
• Approve pay changes (bonuses, overtime, holiday days)
• Flag benefits or perks you’re offering (lunches, team days out, mobile phones, etc.)

Communication is key. If your payroll provider doesn’t know what you’re offering staff, they can’t report it correctly.

Real-World Mistakes We See

Here are some common missteps I’ve seen small UK businesses make when DIY-ing payroll:

• Buying travel cards for employees who commute—this counts as a benefit in kind if used outside work hours
• Paying a personal phone bill rather than giving a company mobile
• Providing food during working hours without declaring it
• Organising team events (like a summer picnic or drinks) without checking the annual tax-free limit.

In one real case, a founder took their top salesperson to a sports event using a spare ticket.

It seemed harmless—but HMRC picked it up in a routine audit. While they escaped with just a warning, the potential penalty could have been up to 100% of the tax owed plus interest.

When to Get Professional Help

✅ Safe to DIY:

• If you’re a one-person limited company paying only yourself a small salary and dividends
• If you’re using reliable payroll software and have time to learn the rules

🚫 Get help if:

• You have any employees besides yourself
• You offer any perks, bonuses or non-cash benefits
• You’re unsure about tax codes, auto-enrolment or student loans
• You just don’t want to spend hours every month on payroll admin.

Do What’s Right for Your Time and Risk Level

Yes, you can do your own payroll. But if payroll isn’t your thing, it’s okay to get help—and in most cases, it’s the smarter call.

Outsourcing costs less than you think and saves a mountain of admin, not to mention potential fines or awkward conversations with staff. It also means your team always gets paid right and on time.

And most importantly, it gives you back time to focus on growing your business—not learning about .

Before You Go …

If you are interested in understanding more about the PAYE system that underpins payroll obligations check out our introductory guide that breaks it down.

An Introduction To PAYE – Pay As You Earn Tax