HMRC Basic PAYE Tools: an honest review, 9 limitations, and the best alternatives

Basic PAYE Tools (BPT) is HMRC's own free payroll software. It has been the default answer for very small employers for years, and for a narrow slice of them it is still a perfectly reasonable choice. But "free and official" is doing a lot of work in that sentence. BPT was built to let the smallest schemes meet their Real Time Information (RTI) filing obligations — not to run a payroll operation — and the gap between those two things catches a lot of employers out.

This is an honest review: what BPT genuinely does well, the nine limitations that matter in practice, and the alternatives — free and paid — worth considering in 2026.

What Basic PAYE Tools does well

Credit where it is due. BPT:

• Costs nothing, with no trial cliff, no per-employee pricing and no renewal increase — ever;
• Calculates PAYE tax and National Insurance using HMRC's own rules, so the arithmetic is authoritative;
• Files your Full Payment Submission (FPS) and Employer Payment Summary (EPS) directly to HMRC, which covers the core legal obligation of running payroll under RTI;
• Handles the basics of starters, leavers and statutory payments for a simple scheme.

If you are a director-only company, or you pay one or two employees a fixed salary with no workplace pension complications and no construction work, BPT can be all the software you need. New to running payroll altogether? Start with our guide to running payroll for your first employee, and our explainer on what an FPS submission is.

Now for the other side of the ledger.

The nine limitations of Basic PAYE Tools

1. It is designed for employers with fewer than 10 employees

This is not a soft recommendation — it is the stated design scope. HMRC positions BPT for businesses with fewer than 10 employees, and its free-software directory draws the same line. If you are approaching that threshold, or expect to, you will be migrating eventually; the only question is whether you do it on your own schedule or under pressure.

2. Payslips are rudimentary

BPT can generate a basic payslip — an improvement on the old days, when it produced none at all. But the output is bare-bones: no branding, no employee self-service, no automatic distribution. Employees are legally entitled to a payslip, and many BPT users end up building their own in a spreadsheet or word processor every pay period, which is exactly the manual work payroll software exists to remove.

3. No automatic-enrolment pension support

This is the limitation with the sharpest legal edge. BPT has no workplace pension functionality at all: it does not assess which of your staff must be enrolled, does not calculate employer or employee contributions, does not produce the statutory communication letters, and does not generate the contribution files your pension provider needs. Every one of those is a legal duty for almost every UK employer — see GOV.UK's employer guidance on workplace pensions — and with BPT you carry them entirely by hand. The Pensions Regulator has warned about employers mis-assessing staff when auto-enrolment is handled manually. For any employer with pension-eligible staff, this single gap usually outweighs the £0 price.

4. No CIS

BPT does not touch the Construction Industry Scheme. If you pay subcontractors, you must use HMRC's separate free CIS online service to verify them and file your monthly CIS300 return — a second system, disconnected from your payroll, with payment and deduction statements left for you to produce manually. For a contractor, "free payroll" quietly becomes two parallel filing routines every month.

5. It is not designed for agents or bookkeepers

HMRC says this explicitly. There is no multi-employer management, so an accountant or bookkeeper running payroll for several clients cannot sensibly do it in BPT. If your practice has inherited a handful of BPT clients, consolidating them into proper multi-employer software is one of the easier efficiency wins available.

6. Everything is manual entry

BPT integrates with nothing. No accounting software connection, no import from timesheets, no API. Every employee, every pay change, every new starter is keyed in by hand — and keyed in again anywhere else that needs the data.

7. Your data lives on one computer, and you are the backup plan

BPT is a desktop application. The payroll data sits on the machine it is installed on, and backing it up is your responsibility. A failed hard drive or a stolen laptop without a recent manual backup can mean reconstructing payroll history from FPS records — an afternoon nobody enjoys.

8. The interface shows its age

BPT is functional rather than pleasant. Navigation is dated, workflows are rigid, and small errors can be tedious to unpick. This matters less than the compliance gaps above, but it adds friction to every single pay run.

9. Reporting is minimal

You get what HMRC needs, and not much of what you or your accountant might want: no rich payroll journals, cost analysis or exportable report suite. Come year end, or when your accountant asks for figures, expect manual work.

Who should stay on BPT

To be fair to it: a director-only company, or an employer with one or two staff, no pension-eligible employees, no subcontractors and no growth plans, loses little by staying put. The scheme is simple enough that BPT's gaps do not bite. Everyone else should at least know what the alternatives cost — which, at the bottom of the market, is often nothing.

Free alternatives

HMRC's software directory lists several free products for employers with fewer than 10 employees, so BPT is far from the only £0 option. The question with any free tier is what it withholds. As of July 2026:

Product	Free tier	Worth knowing
IRIS Payroll Basics	Free	Listed in HMRC's free-software section
Primo Payroll (Accentra)	Free up to 10 employees	Notably, includes auto-enrolment on the free tier — a direct answer to BPT's biggest gap. CIS lives in a separate product
Employment Hero Free Payroll	Free	Paid tiers from £3 per employee/month (£20 minimum); no CIS marketed
Shape Payroll Lite	Free up to 3 payslips/month	No HMRC filing integration on the free tier — filing sits behind the £10/month Pro plan
Collegia FreePayroll / Enrolpay Small Payroll	Free	Both appear in HMRC's free-software section
FreeAgent	Free with a NatWest, RBS, Ulster Bank or Mettle business account	Full accounting plus bundled payroll; CIS returns can be prepared but not filed from the software

If your only complaint about BPT is the pension gap and you have fewer than 10 employees, a free tier with auto-enrolment support solves your actual problem at the same price.

Paid alternatives

The paid market for a small employer clusters at roughly £8–12 per month. Prices below are standard non-promotional rates, ex VAT, as of July 2026:

Product	Approx. cost (5 employees)	Model	Files CIS300?
Moneysoft Payroll Manager	£95/year (~£7.92/mo)	Windows desktop	Yes — included
Shape Payroll Pro	£10/mo	Cloud	No (subcontractor-side records only)
Payroo	£10/mo	Cloud	Yes — separate CIS product, priced similarly on top
Sage Payroll Essentials	£10–12/mo (5 employees included)	Cloud	No — CIS filing sits in Sage's accounting products
BrightPay (cloud)	Unpublished — calculator-based pricing	Cloud (desktop retiring in the 2026/27 tax year)	No — CIS is a separate paid product, BrightCIS
Xero Payroll	~£23.50/mo (requires a Xero accounting plan)	Cloud	Yes — £5/mo add-on, in the accounting product
Taxriva	See payroll.taxriva.com	Cloud	Yes — native, in the payroll product

A few honest observations on that table. Moneysoft is the value benchmark — mature, CIS-capable and cheap — but it is desktop-only, which brings its own trade-offs (we cover them in our Moneysoft alternatives guide). BrightPay is a well-regarded product in the middle of a forced transition: its desktop version retires in the 2026/27 tax year and CIS is no longer bundled in the cloud product. Xero and Sage are excellent if you want their accounting suites; less so if you only want payroll.

Where Taxriva fits: we built Taxriva to be cloud payroll and CIS in one product — FPS and EPS filing, payslips, pension calculations with provider files, and native CIS300 filing with subcontractor verification and deduction statements, without needing an accounting subscription or a second product. We are newer than every name above, with a shorter track record, and you should weigh that honestly. But if the reason you are leaving BPT is pensions or CIS, solving both in one place is the point.

Migrating away from BPT: what to record before you switch

Switching at the start of a tax year (6 April) is the cleanest option, but mid-year moves are routine if you capture the right data first. Before your first pay run in new software:

1. Pick a clean cut-over point. Complete and file your final pay period in BPT, then switch before the next one. Do not run the same period in both systems.
2. Record year-to-date figures for every employee: taxable pay, tax deducted, National Insurance (employee and employer, split by NI category letter), student and postgraduate loan deductions, and any statutory payments. These become opening balances in the new software so the year's figures stay continuous.
3. Export or note every employee's details: full name, address, date of birth, National Insurance number, tax code and basis, starter declaration, and pay frequency.
4. Note the payroll ID used for each employee on your FPS submissions. This matters more than most guides admit: if the new software submits a different payroll ID without flagging the change correctly, HMRC can treat the employee as a duplicate employment, which causes tax code confusion. Good software asks for the old ID during import.
5. Record your EPS position: whether you have claimed the Employment Allowance this year, and any statutory pay recoveries to date.
6. Keep BPT and a final backup until after year end. You will want the historical record, and it costs nothing to keep.

The bottom line

BPT is a genuinely useful piece of free software for the simplest schemes, and HMRC deserves credit for maintaining it. But it is filing software, not payroll software. The moment your scheme involves a workplace pension, subcontractors, an accountant, or a tenth employee, its £0 price starts costing you hours — and in the case of auto-enrolment, compliance risk. The free tiers above fix some of the gaps for nothing; the paid options from around £8–12 a month fix all of them. See how the head-to-head plays out in our BrightPay vs Basic PAYE Tools vs Taxriva comparison.