How to set up direct deposit for your employees in the UK

Payday shouldn’t be a pain — for you or your team. If you’re still printing cheques, coordinating manual transfers, or asking employees to chase down payments, it might be time to level up.

Direct deposit is the gold standard for modern, reliable, and seamless employee payments, and setting it up is easier than you think.

In this article, we’ll walk you through the process of setting up direct deposits for your UK-based employees — and show you how an automated payroll platform can make the process faster, safer, and fully compliant from day one. So let’s begin.

How does payroll direct deposit work in the UK?

In the UK, direct deposit is typically processed through one of two systems: Bankers’ Automated Clearing Services (BACS), or Faster Payments.

BACS

BACS is the most commonly used system for payroll in the UK, as it’s ideal for scheduled, recurring payments like monthly salaries. BACS payments:

• Typically require three working days to be processed and settled.

• Require you to have BACS-approved software or access to a BACS bureau. You may need a Service User Number (SUN) from your bank if processing directly.

Because of the built-in buffer time, BACS is well-suited for larger organisations or those with established payroll cycles.

Faster Payments

Faster Payments is a newer system that enables real-time or near-instant bank transfers between UK accounts. It’s supported by most banks and building societies.

The processing time is much quicker (seconds, as opposed to days), and is often used by small businesses or when flexibility is required. Note that, while Faster is supported by most UK business bank accounts, there may be limits on individual transactions (e.g., up to £250,000 per payment).

Which one should you use?

Faster Payments offers speed, but not always the predictability needed for consistent payroll cycles. If you’re running large payrolls or need to guarantee exact pay dates, BACS is still widely seen as the safer choice.

How to set up payroll direct deposit in the UK: Step by step

If you’re using a local payroll provider or managing payroll manually, here’s what the direct deposit setup process looks like in the UK:

1. Choose a payroll provider that supports BACS or Faster

You’ll need access to BACS or Faster to send direct deposits. This can happen in a few ways:

• Through a local payroll provider or accountant

• Through a centralised, global payroll platform like Remote

As well as supporting BACS or Faster, make sure your payroll partner supports payslip generation and RTI filing to His Majesty’s Revenue and Customs (HMRC).

2. Collect your employees’ banking information

To set up payroll direct deposit, you’ll need each employee’s:

• Full name and home address

• Bank name and address

• Sort code (6-digit number identifying the bank branch)

• Account number (8-digit UK bank account number)

• Written permission (not legally required, but best practice)

Make sure the bank details are current and correct, as mistakes can delay payroll or even result in wages being sent to the wrong account. It’s also crucial that you store all data securely, and follow best practices for data protection.

3. Add your employees’ information to your payroll system

Most payroll tools will have a section for entering employee bank details. Some even have built-in validation tools to check sort codes and account numbers.

If you're using BACS directly (or through a bureau), you’ll need a Service User Number (SUN) issued by your bank.

4. Schedule and process payroll

Once you’ve run payroll you’ll need to generate your BACS file and submit it to your bank or bureau (at least two to three working days before payday). Funds will then arrive in your employees’ accounts on the scheduled date.

If using Faster Payments, check your provider's cutoff times and limits. Processing is quicker, but it may not guarantee a specific deposit date.

Simplifying setup with Remote Payroll

If you handle payroll direct deposits in-house or through a local provider, this process can be pretty manual and time-consuming.

But if you use an automated platform like Remote Payroll, the entire process is simple, quick, and straightforward. You don’t need to worry about BACS files, SUNs, or bank delays; we support direct deposit for UK legal entities using secure bank transfers, and are fully compliant with UK employment laws and HMRC requirements.

To give you an idea, here’s how simple the setup process is:

1. Log into your Remote account and navigate to ‘Add payment method’ for your UK entity. Choose ‘BACS direct debit’.

2. Provide your bank information.

3. Authorize Remote to debit your account for payroll. This enables fully automated, on-time direct deposit for every payroll run.

That’s it. From here, Remote:

• Runs your UK payroll accurately and on time

• Files RTI submissions to HMRC

• Delivers payslips to employees

• Deposits net wages directly into employee accounts

You don’t have to manage payment files, worry about late paydays, or stay up to date with UK payroll legislation — we do all that for you.

To see a full, in-depth breakdown of the setup process with Remote, check out our step-by-step support guide.

Is direct deposit legally required in the UK?

No, but it's overwhelmingly preferred. Nearly all employers in the UK pay wages through direct bank transfer.

Can I use direct deposit for contractors in the UK?

Yes, you can. However, keep in mind that contractor payments are handled differently for tax purposes (i.e., there is no tax withholding). Remote makes it easy to pay both contractors and employees from one dashboard.

What happens if an employee changes banks?

Employees can securely update their own banking info through the Remote platform. You’ll be notified, and Remote will verify the new account before processing payments.

How else can Remote help?

A simplified direct deposit setup process isn’t the only benefit of using a centralized payroll platform like Remote. 

You also get:

• Automated calculations, reducing the risk of human errors and ensuring your people are getting paid the right amount.

• Full compliance with all payroll tax laws, even when they change.

• The ability to scale compliantly across countries without adding complexity.

• Bank-grade security for your employee and financial data.

To learn more about how we can remove your payroll headaches, simplify the process, and provide a seamless payroll experience, speak to one of our friendly experts today.

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