Before you start · Do you need a scheme

Do you need a UK payroll at all? Five questions

Plenty of companies set up a UK payroll they did not need, and a few skip one they did. These five questions settle it in most cases, and we would rather tell you the answer is no than sell you something you have no use for.

One: is the person actually an employee

If they are genuinely self-employed, running their own business, working for other clients, controlling their own hours and able to send a substitute, then there is no employment and no payroll obligation. They invoice you and account for their own tax.

Be honest here rather than hopeful, because this is the answer people most want and the one most often wrong. If you direct their work, they are integrated into your team and they work for nobody else, calling it a contract does not make it one.

Two: where is the work actually done

Physically. Not where the contract was signed, not where your company is, and not where the money comes from. If the person sits in the UK and does the work in the UK, UK obligations are engaged even if everything else about your business is elsewhere.

Someone who lives abroad and visits the UK occasionally is a different question, and there are rules for short-term business visitors that may keep you outside a scheme entirely.

Three: do you already have a UK entity

If you have a UK company and it employs the person, you need a normal PAYE scheme. That is the simplest case and the rest of this does not apply.

If you have a UK entity but the person is employed by the overseas parent, it is worth checking properly, because the answer depends on who actually bears the cost and directs the work rather than on which name is on the contract.

Four: is the pay above the thresholds

There are thresholds below which registration is not required, and a genuinely low-paid part-time role may sit under them. But the moment somebody has another job, or earns above the lower earnings limit, the position changes.

This one is worth checking against the current year's figures rather than assumed, because the thresholds move every April and last year's answer may not be this year's.

Five: is there a reciprocal agreement that changes the National Insurance position

Income tax and National Insurance do not always travel together. Depending on the employee's country and the length of the arrangement, National Insurance may be due in the home country rather than the UK, which changes which type of scheme applies rather than whether one does.

This is the question that decides between the two main scheme types, and it is the one most often skipped.

When the answer is genuinely no

A genuine contractor with their own business and other clients. A short business visit under the relevant thresholds and time limits. Somebody who lives and works entirely outside the UK for your overseas company, whatever their nationality.

In those cases you do not need a UK payroll, you do not need us, and anybody telling you otherwise should be asked to explain which of these five they think applies.

When the answer is yes and people still delay

Usually because the setup takes weeks and the start date is close, so it feels easier to begin and sort it out later. That is the decision that turns a straightforward registration into arrears with interest, and it is almost always the employee who ends up carrying it.

If you want it answered properly

The route finder walks the same questions. If your case is one of the awkward ones, tell us the facts and we will tell you which of the five decides it, including when the answer means you have nothing to do.