Almost every conversation about hiring in the UK from abroad begins here, and a lot of them end here too. The label on the contract does not decide it. What the working arrangement actually looks like does.
If the person is genuinely self-employed, there is no UK payroll to set up and no scheme to build. You may still have off-payroll (IR35) duties if they work through a limited company and you have a UK connection, and from 1 October 2026 right to work checks also cover individual subcontractors. If they are an employee, there is a payroll, and the route depends on where you are and whether you have a UK presence. Getting this wrong does not produce a small error. It produces the wrong structure, applied for months, with arrears attached.
It is also the question people most want a quick answer to, which is exactly why it deserves a slow one.
Control. Who decides what is done, how it is done, when and where. A contractor is engaged to deliver an outcome. An employee is directed. If you set someone's hours, tell them which tools to use and expect them at a daily stand-up, the label on the agreement is not going to save you.
Substitution. Could they send a competent replacement in their place and would you accept one? A genuine right of substitution points hard towards self-employment. A clause that says they can, alongside an arrangement where everyone knows they cannot, points at nothing at all.
Mutuality of obligation. Are you obliged to offer work and are they obliged to accept it? A rolling expectation of continuous work, month after month, looks like employment however each month is invoiced.
Financial risk matters. Someone who can make a loss on a job, who fixes defects at their own cost and who provides their own equipment looks self-employed. Someone paid a fixed monthly amount whatever happens does not.
Integration matters too. If the person appears on the internal directory, manages your staff, has a company email address and is described to customers as part of the team, that is a picture of an employee.
And exclusivity matters. Working for one engager for years, with no other clients and no attempt to find any, is difficult to reconcile with running a business.
The first is the long-running contractor. Somebody was engaged for a three-month project in 2021 and is still there. Nothing was ever revisited. The arrangement drifted into employment while the paperwork stayed still.
The second is the person who incorporated at your suggestion. A limited company between you and the individual changes who you contract with. It does not, by itself, change what the working relationship is.
Describe the arrangement to somebody who has never seen the contract. Say what the person does day to day, who tells them to do it, whether they could send somebody else, and what happens if there is no work next month. If your description sounds like a job, it is a job.
HMRC provide a check-employment-status tool, and it is worth running. Treat the result as evidence rather than a guarantee, particularly where the answers were finely balanced or where the arrangement later changes.
Then the question becomes which route. With no UK entity, the scheme depends on where you are and whether you have a UK presence. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts. Most employers outside the EU, the EEA and Switzerland with no UK presence get a direct payment scheme, employers in the EU, the EEA or Switzerland usually get an NI-only scheme, and a UK branch or place of business means normal PAYE. A company with a UK subsidiary usually runs a normal PAYE scheme. If the person works for a UK business, such as a UK host company or end client, that business may have to operate PAYE and pay employer's National Insurance instead. An Employer of Record is a third option that removes the question by employing the person themselves.
None of those are difficult once status is settled. All of them are guesswork before it is.
This page is general information, not tax, legal or employment advice, and reflects the published rates for the 2026/27 tax year. Your own position may differ, so please check it or get advice before acting.
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