UK payroll for employers abroad
Your team in the UK, paid correctly from the first payday. Employer registration, payroll, reporting and pension, all in one place.
| Registration | before the first payday, at most 2 months in advance |
| Reporting to HMRC | Full Payment Submission on or before every payday |
| Employer National Insurance | 15 percent above £5,000 a year |
| Employment Allowance | up to £10,500 for eligible employers |
| Personal allowance | £12,570 |
| Pension | automatic enrolment from age 22 and £10,000 a year |
UK pay runs through PAYE
In the UK the employer deducts income tax and National Insurance straight from salary and pays them over to HMRC. The system is called PAYE, Pay As You Earn. Every payment is reported to HMRC in real time: on or before every payday a Full Payment Submission goes in, with each employee's pay and deductions. File late or not at all and you get reminders and, in some cases, penalties.
Before the first salary is paid, the employer must be registered with HMRC. You can register no earlier than 2 months before the first payday; the PAYE reference arrives by post. Even a limited company whose only employee is its own director has to register.
No UK company: who has to run payroll?
This is the question employers from abroad ask most often. PAYE only binds employers with a tax presence in the UK. A branch, an agency or a representative office creates that presence. An employee working from home and visiting customers does not, in HMRC's view, create it on their own.
Without a presence you may still run PAYE voluntarily, and that is usually the clean route, because your employee is then taxed through payroll like anyone else. If your employee works for a UK company, say a subsidiary or a client, that company must operate PAYE if you do not do so voluntarily. Some clients find that out the hard way. We settle it in writing up front.
If you are setting up a UK company anyway, payroll runs through it. The route there is described under UK company formation.
The key numbers for 2026/27
The UK tax year runs from 6 April to 5 April. These figures apply to 2026/27.
| Item | Value |
|---|---|
| Personal allowance for income tax | £12,570 a year |
| Employer National Insurance (category A) | 15 percent |
| Threshold for employer contributions | £5,000 a year |
| Employment Allowance | up to £10,500 a year |
| Pension: automatic enrolment | from age 22 to state pension age, from £10,000 a year |
GOV.UK: Rates and thresholds for employers 2026 to 2027; Set up and manage a workplace pension scheme
What a UK salary costs the employer
A simple example for 2026/27, without bonuses or benefits: you pay an employee £40,000 a year. On the part above the £5,000 threshold, employer National Insurance of 15 percent is due, which is £5,250. On top comes your contribution to the workplace pension under the automatic enrolment rules. If your business qualifies for the Employment Allowance, it reduces employer contributions by up to £10,500 a year; eligibility is checked at registration.
Income tax and employee contributions come out of the gross salary; they reduce the employee's pay, not your budget. For planning: add employer contributions and pension to gross salary and you have the true cost of a job in the UK. If you are comparing staff costs across several countries, we break down the UK side cleanly.
How we set up your UK payroll
From the first question to the first payslip. You supply the data, we take care of the rest.
- 1
1. Check
Who is the employer, is there a UK presence, where does the employee live and work, and for how long? That decides who runs PAYE and whether special arrangements are worth considering.
- 2
2. Registration
The employer is registered with HMRC in good time before the first payday. You receive the PAYE reference and log-in details.
- 3
3. Onboarding the employee
Starter details, tax code, National Insurance number, bank details, pension. The pension duty starts with your first employee.
- 4
4. Monthly payroll
You report salary, bonuses and absences; payroll is run and the payslips and the report go to HMRC. You pay salaries, deductions and pension contributions.
Posting staff: HMRC's special arrangements
If you only send people to the UK for shorter stints, you do not always have to run full payroll. For employees from treaty countries who spend no more than 183 days in 12 months in the UK there is an arrangement for short-term business visitors. For employees working partly in the UK and partly abroad, the employer can, since 6 April 2025, tell HMRC that it will apply PAYE to only part of the pay. And for expatriates on a net-of-tax salary promise there are tax equalisation arrangements.
Which social security system applies depends on the home country and the length of the posting. We settle that with you and your home payroll before the employee travels; the background is in our piece on posting staff to the UK. The employee's own tax position, from residence to split year, belongs in a UK Tax Consult.
Frequently asked questions
I only have one employee working from home in England. Do I really need this?
Your employee owes UK income tax once they live and work there. Whether you must run payroll as employer or do so voluntarily is settled in the check. Doing nothing is rarely the best answer, for your employee too.
Can my employee pay the tax themselves?
HMRC has arrangements under which the employee pays tax and contributions directly. Whether that suits you depends on the case. We show you the options and their consequences.
What about company cars and other benefits?
Benefits in kind are taxable in the UK and reported. The note explains the basics; the details on cars are in our piece on company car tax.
Does my employee need a visa?
Anyone without the right to live in the UK needs a visa to work there.