Myth-buster · Overseas employers
Do you need a UK company to hire an employee in the UK?
It is the first thing most overseas employers assume they have to do. For a single UK hire, it is almost always the one thing they do not have to do.
It is the first thing most overseas employers assume they have to do. For a single UK hire, it is almost always the one thing they do not have to do.
Usually, no. You can employ someone in the UK without setting up a UK company. It is one of the most common assumptions overseas employers make, that a UK hire means incorporating a UK entity first, and for a single hire it is almost always unnecessary. Two things can change that: if the employee will work for a UK business, such as a UK client or group company, that business may have to run PAYE on their pay, and if their work creates a UK permanent establishment, you can owe UK corporation tax and will have a UK place of business for payroll.
Here is why, when a UK company does still make sense, and how you pay a UK employee without one.
For most employers outside the EU, the EEA and Switzerland with no UK place of business (no UK office, premises, branch or representative) the route is a DPNI scheme, a direct payment scheme in the employee's own name, and it exists precisely so that an overseas employer with no UK presence can run compliant UK payroll. If your company is based in the EU, the EEA or Switzerland, employer’s National Insurance is usually due as well, and HMRC’s route is then an NI-only scheme, which is registered in the employer’s name rather than the employee’s. If the employee will work for a UK business, such as a UK client or group company, that business may have to run PAYE and pay employer’s NI on their pay instead. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts.
A specialist runs the scheme for you, so the fact you have no UK office or UK company does not become your admin problem. See what a DPNI scheme is for the full picture, and how to pay a UK employee from abroad for the routes side by side.
Setting up a UK entity is the right call in some situations, just not usually for the sake of payroll alone. It is worth considering when:
If one of those applies, a UK company plus a standard PAYE scheme may be the better structure. If none does, you are taking on UK accounts, corporation tax and ongoing filings for no real benefit, when a direct payment scheme would have done the job.
A UK company gives you a local presence and more flexibility, at the cost of more admin, filings and running expense. A direct payment scheme keeps things lean, no entity, no UK company accounts, just compliant payroll for the person you actually want to employ. For most overseas employers making their first UK hire, lean wins.
A quick illustration
Picture a fictional agricultural machinery maker in Santiago that has taken on a technical sales manager in Shrewsbury to look after its UK dealers. It sells through those dealers rather than contracting in the UK itself, it has no plans to open a UK office, and it does not need a UK bank account or a UK VAT registration. Incorporating here would give it a set of UK filings and nothing it actually wants. Because the sales manager supports the dealers rather than concluding contracts for the company, a UK permanent establishment is less likely, though it's worth checking if that role changes. A scheme in the sales manager's name covers the payroll, and the company carries on employing its own person directly.
If your company is abroad and you want to employ one person in the UK, you almost certainly do not need to incorporate. Tell us your situation and we will tell you which scheme we expect to ask HMRC for, or whether a UK entity genuinely makes sense, and give you a fixed price either way. Our fee for a DPNI or NI-only scheme starts at £157 a month, run for you.
There is a one-off HMRC scheme setup on top, £500 with the early-onboarding discount, or £750 standard. Those are the rates as they stand for the 2026/27 tax year. Salary, any employer's National Insurance and the pension sit outside that. Salary and pension are the same whoever runs the payroll; employer's NI depends on who the employer is, and an employer with no UK presence on a DPNI usually owes none.
Usually not. With no UK entity an overseas employer can run compliant UK payroll through a direct payment scheme or by registering for UK PAYE itself, so for a single hire you can employ someone in the UK without incorporating.
Yes. Under a DPNI or an NI-only scheme the employee is legally and properly employed, gets a real UK payslip, and has National Insurance and pension handled correctly. On a DPNI Income Tax goes through the scheme too; on an NI-only scheme it goes through Self Assessment or a separate tax-only scheme. You remain the direct employer.
When it is scaling a UK team, needs to contract or trade as a UK business, expects to register for VAT, is raising UK funding, or wants limited liability in the UK. If it is only about paying one employee, a direct payment scheme is usually simpler and cheaper.
A DPNI or NI-only scheme run for you starts at £157 a month for one employee, plus a one-off HMRC scheme setup. There is no UK company to file accounts for, which keeps the running cost and admin down. Not incorporating doesn't by itself rule out UK corporation tax, though: if your UK employee habitually concludes contracts for you, or plays the principal role in concluding them, that can create a UK permanent establishment, so check this first.
This page is general information, not tax or legal advice. Whether a UK entity is right for you depends on your own circumstances, so please check your position or get advice before acting.
Where your company is, where your employee is, and roughly what they are paid. We will tell you whether a direct payment scheme covers it or a UK entity is genuinely worth setting up, and give you a fixed fee. Within one UK business day.
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