Hiring a UK employee from Canada: what Canadian companies need to know
For a Canadian company, UK payroll is recognisable — source deductions, real-time-ish reporting, year-end summaries — but the on-costs, pensions and entity question all work differently. Here's the practical version for Canadian founders, finance and HR teams.
The five differences that surprise Canadian employers
- PAYE is your source deductions, with stricter timing. Income tax and National Insurance come off at source like CPP/EI/income-tax remittances — but the report to HMRC (an RTI submission) is due on or before every payday, not on a monthly remittance schedule.
- The T4 equivalent is the P60 — and year-end is lighter. Employees get a P60 by 31 May; there's no T4 Summary season because HMRC already received everything in real time.
- Employer on-costs sit in a similar range, shaped differently. You'll pay employer NI of 15% on pay above £5,000/year plus a 3% minimum pension — against the Canadian stack of CPP + EI premiums. Run the numbers per salary rather than assuming either is cheaper.
- Holiday is far more generous. UK statutory paid holiday is 5.6 weeks (it can include public holidays) versus the typical Canadian 2–3 weeks — price it into the offer.
- No provincial layer. One national system: no provincial payroll taxes, no workers' comp boards, no Quebec variant. The UK system is genuinely simpler once it's set up.
No UK entity? You usually don't need one. A Canadian corporation with no UK presence can employ UK staff directly through a DPNI scheme — HMRC's own mechanism for exactly this. You stay the employer; no UK subsidiary required just to run payroll.
Your three routes — and the one most Canadian companies miss
However you hire, UK payroll runs one of three ways: your own UK PAYE scheme (needs a UK entity), a DPNI / NI-only scheme (no UK entity needed — you stay the direct employer), or an Employer of Record (a third party employs them for you, at a premium — see the cost comparison). The DPNI route is the one most Canadian companies have never heard of — and it is usually the leanest way to hire one to ten UK staff without incorporating. Compare the three routes side by side, or answer three questions to find yours.
Secondments and social security
If you're posting an existing Canadian employee to the UK rather than hiring locally, the Canada–UK social security arrangements are narrower than most treaty pairs — whether contributions stay Canadian or move to UK NI needs checking for your specific posting. We confirm the position as part of setup so the first payday is right.
UK payroll quick facts
| Item | The UK position (2026/27) |
|---|---|
| Currency & pay cycle | GBP; monthly is the norm (weekly possible) |
| Income tax & NI | Deducted at source under PAYE; reported to HMRC in real time (RTI) on or before each payday |
| Employer National Insurance | 15% on pay above £5,000/year — the main on-cost to budget |
| Workplace pension | Auto-enrolment: minimum 3% employer / 8% total on qualifying earnings |
| Paid holiday | 5.6 weeks statutory (can include public holidays) |
| Payslips | An itemised payslip is a legal requirement every pay period |
| Paying HMRC | Monthly, by the 22nd (electronic) |
Estimate the all-in cost of a UK hire with our free employer-cost calculator, or see what a UK employee really costs.
Working across five to eight hours
Toronto is five hours behind the UK; Vancouver eight. Async-first absorbs it: approvals you send in your afternoon are processed in the UK morning, and we reply within one UK business day. For live calls we hold early-evening UK slots — lunchtime in the East, morning on the Pacific.
Hiring in the UK from Canada?
We set up the right scheme — PAYE or DPNI — and run your UK payroll end to end, with support that works across time zones. Replies within one UK business day.
Get a fixed quoteThis guide is general information, not tax, legal or immigration advice, and reflects our understanding of the rules as at June 2026. Your circumstances may differ — please get specific advice before acting.