HM Revenue and Customs Basic PAYE Tools Review 2026: Free UK Payroll and RTI Compliance

Basic PAYE Tools is strictly designed for micro-businesses operating in the United Kingdom. The software is hard-capped and cannot be used by employers with 10 or more employees [04] [05]. As a result, small, mid-market, and enterprise organizations must look to commercial payroll alternatives to handle their workforces.

Basic PAYE Tools is strongest for UK micro-businesses that need to process simple payroll and submit Real Time Information (RTI) to the government [02] [07]. Its clearest advantage is that it is entirely free and officially maintained by HM Revenue and Customs (HMRC), which guarantees direct compliance with UK tax regulations without requiring a commercial software subscription [11].

The main trade-off is its lack of workplace pension auto-enrolment functionality [12]. This matters most for employers who must assess their staff for pension eligibility and calculate required contributions, as they will have to manage these legal obligations manually outside the software. Additionally, the strict 9-employee limit means growing businesses will inevitably be forced to migrate [05].

Choose Basic PAYE Tools if you have fewer than 10 employees, a highly straightforward payroll, and want a zero-cost official solution [13]. Consider alternatives if you have 10 or more employees, need automated pension auto-enrolment, or want integration with accounting software. Before signing, verify how your business will manually handle workplace pension assessments.

Basic PAYE Tools is an on-premise, downloadable payroll software provided free of charge by HM Revenue and Customs (HMRC) [02]. It is designed specifically for micro-businesses in the United Kingdom to calculate PAYE (Pay As You Earn) tax and National Insurance deductions [06]. The software allows employers to generate payslips and send Real Time Information (RTI) submissions, such as Full Payment Submissions, directly to the UK government [07] [08].

Best for

• UK micro-businesses with fewer than 10 employees seeking a completely free payroll solution. [04] [10]
• Employers with simple payrolls who want an officially recognized tool for RTI compliance. [11]

Not ideal for

• Businesses with 10 or more employees, as the software strictly prohibits larger headcounts. [05]
• Employers who need automated workplace pension auto-enrolment assessments and calculations. [12]

Buyers should verify first

• How they will manually handle workplace pension auto-enrolment obligations. [12]
• Whether their payroll complexity requires commercial software features like bulk payslip processing. [08]

Basic PAYE Tools provides native local payroll coverage exclusively for the United Kingdom [03]. It calculates PAYE and National Insurance deductions and transmits Real Time Information (RTI) directly to HMRC via Full Payment Submissions [06] [07]. The software is strictly limited to domestic UK payroll for fewer than 10 employees and does not support multi-country payroll or automated workplace pension deductions [04] [12].

Because it is developed and maintained directly by HM Revenue and Customs (HMRC), the software ensures alignment with UK tax laws. [09]

• Payroll tax compliance: The software guarantees direct compliance with UK Real Time Information (RTI) reporting requirements. [09]

Basic PAYE Tools fits best for UK-based micro-businesses with fewer than 10 employees that require a simple, free method to process payroll and submit taxes [04] [10]. It is the strongest choice for employers who prioritize a zero-cost, official HMRC solution over advanced commercial features [11]. Businesses with 10 or more employees, or those requiring automated workplace pension auto-enrolment, must look elsewhere [05] [12].

• Confirm your business has fewer than 10 employees, as the software enforces a strict cap.
• Verify how you will manually assess and calculate workplace pension auto-enrolment outside the software.
• Confirm you are comfortable downloading and installing on-premise software.
• Ensure your payroll is straightforward enough not to require advanced commercial features like bulk processing or deep accounting integrations.