FreeAgent is accounting software that many UK contractors and one-person companies use, often because their bank gives it to them free. This post looks at its payroll from the point of view of a director paying themselves, with or without a few staff: what it covers, what it costs and what to check before you rely on it. Our post on outsourced payroll and software covers the wider choice.
We haven't run payroll on these products. Everything here comes from each company's own public pages, read on 8 October 2026, and prices change: check the live page before you sign up.
What FreeAgent payroll does
FreeAgent's payroll page says it works out PAYE and National Insurance and submits Real Time Information (RTI) to HMRC from inside the accounting software. FreeAgent Central Ltd appears on GOV.UK's list of HMRC-recognised payroll software.
- Payslips each month, with notes and your logo, and a notification to employees when they're ready; P60s at the end of the tax year.
- Employment Allowance claims, student loan deductions and statutory pay.
- Pension contributions worked out from default settings for each employee.
- Corrections to payslips from previous tax years, a monthly report of what was sent to HMRC, and a final submission if you close the PAYE scheme.
- As many employees as you need at no extra cost.
FreeAgent describes it as monthly payroll on both its pricing and payroll pages. If you pay anyone weekly, ask FreeAgent whether that's supported before you switch.
What does FreeAgent payroll cost?
| Plan | Monthly | Annual | Payroll included |
|---|---|---|---|
| Limited company | £33 (£16.50 for the first 6 months) | £330 (£165 for the first year) | Yes |
| Partnership or LLP | £27 | £270 | Yes, on the accruals basis |
| Sole trader | £19 | £190 | Yes, on the accruals basis |
| Landlord | £10 | £100 | No |
The same plans are free if you have a business current account with NatWest, Royal Bank of Scotland or Ulster Bank, for as long as you keep it, or a Mettle account with at least one transaction a month (Mettle doesn't apply to partnerships). Optional add-ons can still be charged.
Sole traders and partnerships on the cash basis don't get payroll: FreeAgent says choosing cash basis removes the stock and payroll features.
What directors should check
Directors' National Insurance follows its own rules. GOV.UK says employers normally use an annual earnings period for directors, working out NI on total pay for the tax year so far, or an alternative method where each payment is assessed on its own and payroll software checks at the year end whether more is due.
FreeAgent's public pages don't say which method it uses for directors. Check that in its help pages or with support before your first director's pay run, especially if you pay a bonus or an irregular salary.
| Threshold | Monthly | Yearly |
|---|---|---|
| Lower Earnings Limit | £559 | £6,708 |
| Secondary Threshold (employer NI starts, 15%) | £417 | £5,000 |
| Primary Threshold (employee NI starts, 8%) | £1,048 | £12,570 |
A sole director with no other employees can't use Employment Allowance to cancel employer NI: GOV.UK says a company's only director must not be its only employee liable for secondary Class 1 National Insurance.
A director's monthly salary, worked out
Two common monthly salaries for a director, using the 2026/27 thresholds above (category A rates: 8% employee NI above the Primary Threshold, 15% employer NI above the Secondary Threshold). These are the figures any payroll software, FreeAgent included, should arrive at under the alternative method for a regular monthly salary.
| Monthly salary | Employee NI | Employer NI |
|---|---|---|
| £1,048 (Primary Threshold) | £0 | 15% of £631 = £94.65 |
| £559 (Lower Earnings Limit) | £0 | 15% of £142 = £21.30 |
Income tax depends on the director's tax code. With the standard 1257L code, the personal allowance is £1,048 a month, so neither salary has income tax deducted if it is their only income.
Who FreeAgent payroll suits
- A limited company that already uses FreeAgent for its books: payroll is already paid for and sits in the same software as the accounts.
- Directors who bank with NatWest, RBS, Ulster Bank or Mettle: the whole package can cost nothing.
- A few monthly-paid staff: there's no per-employee charge as the team grows.
It suits you less if you pay weekly, if your accountant runs payroll in another product, or if you only need payroll and none of the accounting. A payroll-only tool or HMRC's free Basic PAYE Tools (fewer than 10 employees) can then be cheaper.
Where PayDocs fits
PayDocs isn't payroll software and doesn't send RTI submissions, so it doesn't replace FreeAgent's payroll. If you need a payslip outside it, for a past month or a one-off payment, PayDocs makes one from your figures. PayDocs works out PAYE income tax, National Insurance and supported deductions for 2026/27 pay dates. Previewing is free; a PDF is £3.99 per payslip once checkout opens.
This is general information about the rules for employers in the UK for the 2026/27 tax year, as published on 8 October 2026. It is not tax or legal advice.
Questions
Is FreeAgent payroll free?
It's included in FreeAgent's limited company, partnership and sole trader plans at no extra cost per employee. The plans themselves are free with a NatWest, RBS or Ulster Bank business account, or a Mettle account used monthly.
Does FreeAgent send RTI to HMRC?
Yes. FreeAgent says its payroll submits Real Time Information directly to HMRC each month, and FreeAgent Central Ltd is on GOV.UK's list of HMRC-recognised payroll software, in the paid-for section.
Can FreeAgent run weekly payroll?
FreeAgent's pricing and payroll pages describe monthly payroll and don't mention weekly pay. If you pay anyone weekly, ask FreeAgent before switching your payroll to it.
Can a sole director claim Employment Allowance through FreeAgent?
Not if the director is the company's only employee liable for employer National Insurance. GOV.UK says a company's only director must not be its only such employee. Software can't change that rule.
Sources
- FreeAgent: Pricing for UK limited companies (checked 8 October 2026)
- FreeAgent: Payroll features (checked 8 October 2026)
- GOV.UK: Find payroll software that is recognised by HMRC
- GOV.UK: National Insurance for company directors
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Employment Allowance, check if you're eligible
- GOV.UK: Basic PAYE Tools
Sources checked 8 October 2026. This article explains how pay documents work; it is not tax or legal advice.
