Xero payroll reports: which ones to run, and what your wages really cost

Short answer: for most months you need three Xero payroll reports. The Payroll Activity Summary gives the totals for a period (gross pay, tax withheld, super or pension, net pay). The Payroll Employee Summary gives the same figures per person. Leave Balances shows the holiday each person has built up. Find them under Accounting › Reports and search for the name. Then do three checks: payroll totals against the wages lines on your Profit and Loss, the tax still owed against the Balance Sheet, and leave owed as a dollar figure, because Xero shows it in hours. In the worked month below, a café’s payroll costs $51,280, not the $46,000 of gross wages. $8,100 of tax is still sitting in the bank waiting to be paid, and staff have $16,380 of annual leave owed to them that appears on no report as a dollar amount.

The Xero payroll reports, and what each is for

Report	What it shows	Use it to
Payroll Activity Summary	Totals by pay item for a date range: earnings, tax withheld, super or pension, deductions, net pay	Check payroll against the Profit and Loss and the BAS or HMRC figures
Payroll Employee Summary	Earnings, deductions, tax, super, net pay and reimbursements for each employee	See who costs what, and answer a staff query about their pay
Payroll Activity Details	Every pay item and rate, line by line, for a date range or one pay run	Find the line behind a difference
Leave Balances	Leave accrued, taken and still available for each person, in hours	Put a dollar value on the leave you owe
Superannuation Accrual (Australia)	Super owed for each employee	Check super before it is paid
P32 and Pension Contributions (UK)	What is owed to HMRC for the period, and pension contributions for each pay run	Check the PAYE payment and the pension upload

Report names differ a little between the Australian, UK and New Zealand payroll editions and change between releases. If one does not appear, search Xero Central for the name with your country. Each Xero plan includes payroll for a set number of people and charges for every extra person each month (in the UK £1.50 on most plans); what Xero costs a month lists the limits and works out whether a bigger plan is worth it.

A worked month: a café in Hobart

These figures are made up. Mia’s café has eight staff paid weekly through Xero Payroll. Sales for September 2026 were $150,000 before GST. This is the Payroll Activity Summary for the four pay runs in September.

Line	$
Ordinary hours	41,500
Overtime	2,000
Annual leave taken	2,500
Gross earnings (W1 on the BAS)	46,000
Tax withheld (W2 on the BAS)	(8,100)
Net pay to staff	37,900
Super at 12% of ordinary time earnings (41,500 + 2,500 = 44,000)	5,280

Brackets are minus figures. Overtime is usually not ordinary time earnings, so it attracts no super guarantee; check the award or agreement.

What the wages really cost. Gross pay plus super is $51,280, which is 34.2% of sales. Owners who look only at the wages figure on the bank statement see the $37,900 of net pay and undercount by more than $13,000 a month. The wage percentage calculator works out the same share from your own figures.

Check 1: payroll against the Profit and Loss

Mia’s Profit and Loss for September shows Superannuation $5,280, which matches, but Wages and Salaries $47,200, which is $1,200 more than the payroll report. Payroll Activity Details shows nothing extra, so the difference is outside payroll. Account Transactions for the Wages account finds it: a $1,200 bonus paid to a supervisor by bank transfer and coded straight to Wages. Because it never went through a pay run, no tax was withheld and it was not reported to the ATO through Single Touch Payroll. It should be processed in a pay run, and the bank line recoded to the wages payable account so it is not counted twice. Ask your bookkeeper if you are unsure.

Check 2: the tax still owed

Of September’s payroll, net pay left the bank on each payday and super went to the funds within days of each payday (payday super, which applies from 1 July 2026). That is $43,180 gone. The $8,100 of tax withheld has not gone anywhere yet. It sits in PAYG Withholdings Payable on the Balance Sheet and leaves with the next activity statement. At around $97,000 a year of withholding, the café is a medium withholder, so it pays monthly, by 21 October for September. If the Balance Sheet shows more than one month in that account, a payment has been missed or coded to the wrong place. The Xero BAS report guide shows how W1 and W2 flow into the activity statement.

Check 3: the leave you owe

The Leave Balances report shows 520 hours of annual leave across the eight staff. Xero counts leave in hours, and unless you or your accountant post a journal, its dollar value does not appear on the Balance Sheet. At an average base rate of $31.50 an hour that is $16,380 owed to staff, before any leave loading the award requires. It is paid when people take holidays, or in one go when someone leaves: a barista resigning with 152 hours at $30 takes $4,560 in their final pay, on top of their last week’s wages.

The UK version of the same checks

Xero’s UK payroll gives the same summary reports, plus the P32, which shows what you owe HMRC for the tax month: PAYE, employee and employer National Insurance, less allowances such as the Employment Allowance. It is due by the 22nd of the next month if you pay electronically. The Pension Contributions report shows what goes to the workplace pension for each pay run.

The cost on top of gross pay is bigger than many owners expect. At the 2026-27 rates (unchanged from 2025-26: employer National Insurance stays at 15% above £5,000 a year, and the pension qualifying earnings band still starts at £6,240), an employee on £3,000 a month costs the employer:

Line	£
Gross pay	3,000.00
Employer National Insurance: 15% of pay above £416.67 a month (£5,000 a year)	387.50
Employer pension: the 3% minimum on qualifying earnings above £520 a month	74.40
Total cost	3,461.90

That is 15.4% on top of gross pay, before the Employment Allowance, which reduces employer National Insurance for many small employers. Thresholds change each April; check the current rates with your payroll provider.

How to run and check payroll reports in Xero

1. Post every pay run for the period and reconcile the bank to the period end, so the net pay lines are matched.
2. Open Accounting › Reports, search for Payroll Activity Summary, choose the dates (a month, a quarter or the BAS period) and run it.
3. Compare it with the Profit and Loss for the same dates: wages, super or pension, and any payroll expense accounts. A difference means something was coded to a wages account outside payroll, or a pay item maps to the wrong account (check the pay item settings).
4. Compare the liabilities with the Balance Sheet: PAYG withholding or PAYE, and super or pension payable, should hold only what has not been paid yet.
5. Run Leave Balances and multiply the hours by each person’s rate, or an average rate for a quick figure.
6. Use Payroll Employee Summary when you need one person’s year to date, for example before a pay review or a final pay.

Common mistakes

• Paying staff outside payroll. A bonus or advance by bank transfer misses tax, super or pension, and the reporting to the ATO or HMRC.
• Reading net pay as the cost of staff. Tax withheld, super or pension, and employer National Insurance in the UK sit on top of it.
• Treating withheld tax as spendable. It belongs to the tax office from payday.
• Ignoring leave in hours. A large leave balance is a real debt that lands when people take holidays or leave.
• Pay items mapped to the wrong account, so wages land in cost of sales one month and overheads the next, and the gross margin jumps around.
• Running reports before the last pay run is posted, so the month is one week short.

Common questions

Where are the payroll reports in Xero? Go to Accounting, then Reports, and search for the report by name, for example Payroll Activity Summary, Payroll Employee Summary or Leave Balances. The payroll reports appear once Xero Payroll is set up and pay runs are posted.

What is the difference between the Payroll Activity Summary and the Payroll Employee Summary? The Activity Summary gives totals by pay item for the whole business over a date range. The Employee Summary breaks the same figures down by employee. Use the first to check the books and the second to see each person’s pay.

Why doesn’t my payroll report match my Profit and Loss? Usually because something was coded to a wages account outside a pay run, such as a bonus paid by bank transfer, or because a pay item is mapped to a different account. Run Account Transactions for the wages accounts and look for lines that did not come from payroll.

How do I see the leave liability in Xero? Run the Leave Balances report for the hours each person has available, then multiply by their pay rate. Xero tracks leave in hours, so the dollar amount only appears on the Balance Sheet if a journal is posted for it.

How much does an employee really cost? In Australia, gross pay plus super at 12% of ordinary time earnings, plus workers compensation and any payroll tax. In the UK, gross pay plus employer National Insurance and the employer pension contribution, which for an employee on 3,000 pounds a month is about 15% on top.

Does Xero payroll pay the tax for me? No. Xero calculates and reports the tax withheld, but the money stays in your bank account until you pay the ATO or HMRC. Watch the withholding liability on the Balance Sheet so the payment is not a surprise.

See wages against sales every Monday

ReportPilot reads your Xero figures and sends a short plain-English email every Monday. It covers sales and profit against last month and the same month last year, the cash in the bank against the end of last month, money owed to you that is past due and by whom, and bills due in the next two weeks against your cash. It does not run payroll or file anything with the ATO or HMRC. It asks Xero for read-only access, and there is a 14-day free trial with no card.