13 June 2024

UK small businesses spend £1.7bn each time they run payroll

Banking & Finance
| The European |

Small businesses spend almost £300 each time they run payroll, equivalent to over £3,500 per year

Tide, the UK’s leading business financial platform[1], has today revealed the large amounts of time and money small businesses spend on running payroll for staff, ahead of the launch of Tide Payroll.

A study conducted on behalf of Tide amongst decision makers at businesses with up to 50 employees* found that collectively, UK small businesses spend up to £1.7bn each time they run payroll for their employees, part-time and casual staff**. This is almost £300 per business, mounting up to over £3,500 over the course of a year. 10% of respondents said they spend between £500 and £1,000 each time they run payroll, 8% paying over £1,000.

The most common way that businesses run payroll is via dedicated software, at 41%, with 31% having their accountant take care of it. As well as the high cost of administering payroll, it is also a very time consuming task, due to the complexity. Business leaders said they spend 2.5 hours on payroll admin, each time they run payroll, which mounts up to 30 hours a year. This is precious time being detracted from time that business owners could spend on growing their businesses.

Tide’s findings come ahead of the launch of Tide Payroll, in partnership with KeyPay, which will allow business owners to dramatically reduce the amount of time and money spent on running Payroll. Tide will charge £5+VAT per month, plus £1+VAT for each employee payroll is executed for. This means that for a business with 10 employees the cost of running payroll with Tide would be £15 per pay run, or £180 + VAT per year vs the £133 per pay run that they currently spend, on average, which mounts up to over £1,596 per year.

Ali Travis, Tide VP of Business Services said: “There are numerous administrative tasks that small business leaders have to contend with that end up costing them huge amounts of time and money. Tide is dedicated to simplifying life for small business owners, with payroll being the latest task we’re tackling.

“The nature of work and running a business is changing, with freelancers and contractors being used more and more by small businesses. It is therefore essential that business owners have a quick and simple way of paying those who do work from them. Working out different tax contributions and salaries each month can be costly and cause a real headache – this is why we have created a product that streamlines the process and gives Tide members confidence that they are making the correct payments each month.”

Chris Deeson, UK Country Leader, KeyPay said: “As experts in payroll we have witnessed the cost and difficulty posed by the traditional ways of conducting payroll. The nice thing that Tide is doing is to look at their clients and to rigorously focus on solving their real life challenges.

Tide Payroll is simple to set up and delivers all aspects of automated payroll; be it compliance, pensions, accounting integrations and of course ultimately payments. This is next generation stuff, because nobody sets up a small business to run payroll, but everyone wants to be paid on time and without fuss.”

Tide Payroll, to be rolled out in the coming weeks, has been designed with simplicity and cost cutting at its heart – Tide members will be able to process salary payments directly from the Tide account and do automatic pay runs, while feeling reassured that Tide payroll is fully HMRC compliant. This will dramatically reduce the time spent on previously confusing and costly manual processes.

Further information


*The survey was conducted by TLF Research, using their online panel YourSayPays, on behalf of Tide. 500 decision makers at businesses with up to 50employees were surveyed between 9th and 15th February 2021.
**£1.7bn = £298 spent by each small business, on average, every time they run payroll x the 5.8 million small businesses in the UK.
[1] Tide is not a bank, but a business financial platform and the leading digital challenger in business banking services. We believe that a platform approach is the future of business banking, allowing us to offer both financial and admin services to SMEs saving them time (and money) to allow them to focus on what they love: running their businesses.

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