EOR vs PEO vs payroll provider in the UK: who is the employer?

The three models at a glance

Employer of Record: someone else is the employer

An Employer of Record employs your person on your behalf. It signs the employment contract, runs the payroll and takes on the employer's duties, while you direct the day-to-day work. You pay it a monthly fee for each employee.

Before you sign, ask who will actually be named as the employer on the contract, and how you leave.

PEO: a label worth reading closely

PEO stands for professional employer organisation. The term describes a provider that takes on HR, benefits and payroll administration under an arrangement usually called co-employment, with employer tasks shared between you and the provider.

For a UK hire, don't rely on the label. Two questions tell you what you are actually buying:

• Who is named as the employer on the employee's contract?
• Whose PAYE scheme pays the employee, and who reports that pay to HMRC?

If the answer to both is the provider, the arrangement works like an Employer of Record. If the answer to both is you, it works like a payroll provider with HR services added.

Payroll provider: you stay the employer

A payroll provider runs the payroll for you: the payslips, the reports to HMRC, the workplace pension and the year end. The employment relationship stays yours, and you do not need a UK company. There are three routes, and which one fits depends mainly on where your company is based.

• DPNI. The employee sets up a DPNI and pays both their income tax and their employee National Insurance to HMRC under one PAYE reference. HMRC's DPNI guidance includes employees of an overseas employer that has no UK address it pays wages from.
• NI-only. When someone works in the UK for an employer based in the EU and UK National Insurance is due, it is due on both sides, the employee's and the employer's, so the scheme is an NI-only scheme in the employer's name and not a DPNI or DCNI.
• Your own UK PAYE. A company with no UK presence doesn't have to run UK PAYE, but it can choose to run it in its own name.

We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts.

Some duties stay with you as the employer on every route. Before someone starts, you must check they are allowed to work for you in the UK. The workplace pension (auto-enrolment) duties also start on the employee's start date, not when HMRC open the scheme.

What each one costs

The major Employer of Record platforms publish starting prices of $399 to $699 per employee per month, about £297 to £519 at HMRC's October 2026 rate, with $599 (about £445) the most common (each platform's own pricing page, read 22 October 2026). A starting price is the lowest fee, and a quote can be higher. Our guide to Employer of Record cost per employee sets that fee beside the cost of your own UK payroll. For a PEO, ask for the full price in writing, with every charge listed beside the headline fee.

A DPNI costs £157 a month. An NI-only scheme costs £157 a month for one employee, and £150 a month plus £7 per payslip for two or more. Setup is £750, or £500 if you go ahead within two weeks of your quote, and no VAT is added. A UK PAYE scheme in the company's own name starts at £225 a month plus £8 per payslip, and setting it up costs £350.

An Employer of Record becomes the legal employer and takes on the employer's duties; we run the payroll while you stay the employer, so the fees pay for different things. When the scheme is in the employee's own name, the employee is our client and pays our fees.

EOR, PEO and payroll provider: common questions

What is the difference between an EOR and a PEO?

An Employer of Record becomes the legal employer of the worker. A PEO is usually described as sharing employer duties with you, and for a UK hire what that means depends on the contract. Ask who is named as the employer on the employee's contract, and whose PAYE scheme pays them.

Is a payroll provider the employer?

No. A payroll provider runs the payroll and you stay the employer. Onshore Partners is a payroll provider, not an Employer of Record and not a PEO.

Can I use a payroll provider without a UK company?

Yes. A company with no UK presence doesn't have to run UK PAYE, but it can choose to run it in its own name. HMRC's direct schemes are the other route: a DPNI, set up in the employee's name, or an NI-only scheme in the employer's name where the employer is based in the EU, the EEA or Switzerland. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts.

What does a payroll provider cost for one UK employee?

A DPNI costs £157 a month. An NI-only scheme costs £157 a month for one employee. A UK PAYE scheme in the company's own name starts at £225 a month plus £8 per payslip, and setting it up costs £350. No VAT is added.

Read next

• Employer of Record alternative in the UK, when you need one and when you don't.
• Employer of Record cost vs your own payroll, with an interactive comparison.
• When an Employer of Record is the right answer, the cases where it fits.
• Switch from an EOR to your own UK payroll, how the move works.
• Pay a UK employee from abroad, the routes in plain terms.
• Employer of Record UK for US companies, cost and the direct route.
• Employer of Record UK: the complete guide, every EOR guide in one place.