Hiring a UK employee from Germany: what German companies need to know
Since Brexit, hiring in the UK from Germany means treating it like any third country, but the payroll itself is leaner than German Lohnabrechnung, and you may not need a UK entity at all. Here's the practical version for German founders, HR and Steuerberater.
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The five differences that surprise German employers
- Freedom of movement is gone. Right-to-work checks are not. You must verify every UK hire's right to work (British/Irish citizens, settled status, or a visa). Hiring a UK resident locally is straightforward; moving a German employee over needs a sponsored visa first.
- Total employer cost is lower than at home. The UK employer pays National Insurance of 15% above £5,000/year plus a 3% minimum pension, meaningfully below the roughly 20%+ a German employer adds in Sozialversicherung.
- Payroll reporting is real-time, but simpler. PAYE with RTI replaces the monthly Lohnsteuer-Anmeldung cycle: tax and NI are deducted each payday and reported to HMRC on or before it. No Krankenkasse coordination, no separate church tax.
- No works councils, lighter dismissal law. There's no Betriebsrat equivalent, and no Kündigungsschutzgesetz-style protection from day one, and full unfair-dismissal rights generally arrive after two years. Contracts and notice still matter; a written statement of terms is required from day one.
- Holiday is generous by law. 5.6 weeks' statutory paid holiday (which can include the UK's public holidays), close to German norms, so your offer letters translate easily.
No UK entity? You usually don't need one. A GmbH with no UK presence can employ UK staff directly, without a UK company. The usual route for an EU employer is an NI-only scheme rather than a DPNI, because an EU employer is liable for employer's National Insurance as well as the employee's, and an NI-only scheme is set up in the company's name. Income tax is then handled separately. We confirm the right scheme with HMRC before anything is set up. No UK Tochtergesellschaft needed just to run payroll.
Your three routes, and the one most German companies miss
However you hire, UK payroll runs one of three ways: your own UK PAYE scheme (needs a UK entity), a direct payment scheme (a DPNI or an NI-only scheme, which are different things and we confirm which applies) (no UK entity needed, because you stay the direct employer), or an Employer of Record (a third party employs them for you, at a premium). The DPNI route is the one most German 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
For temporary postings from Germany, the UK to EU Trade and Cooperation Agreement's social-security protocol can keep a seconded employee in the German system (with an A1-style certificate) for a period, which changes what the UK payroll must deduct. We confirm the position as part of setup so contributions land in the right country from payday one.
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 one hour
The easy part: the UK is only one hour behind. Approvals, queries and calls fit inside the same working day. We reply within one UK business day, and your employee's payslips, RTI filings and pension submissions all run on UK statutory deadlines without you tracking them.
Hiring in the UK from Germany?
We confirm the right scheme with HMRC, set it up, 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, so please get specific advice before acting.