Hiring a UK employee from India: what Indian companies need to know

If your Indian company is hiring its first person on the ground in the UK (a sales lead, an account manager, a country head), the good news is you almost certainly don't need to set up a UK company to do it. Here's the practical version for Indian founders, finance and HR teams.

The five differences that surprise Indian employers

• You don't need a UK entity to employ someone in the UK. Through a direct payment scheme, or by registering for UK PAYE itself, a company based in India with no UK presence can be the direct employer of UK staff. No UK subsidiary, branch or place of business required just to run one payslip.
• One PAYE deduction, not TDS plus PF plus ESI plus PT. UK payroll deducts income tax and National Insurance under PAYE, reported to HMRC in real time (RTI) on or before each payday. There's no separate Provident Fund, ESI or Professional Tax layer. The nearest equivalent to PF is the workplace pension, below.
• You're hiring UK-based, right-to-work-eligible people. Every UK hire needs a right-to-work check (British and Irish citizens show a passport, or an Irish passport card; anyone else, including people with settled or pre-settled status or a visa, usually proves it online with a share code). This guide is about employing people who already live and can work in the UK. Relocating someone from India usually needs a work visa first, often a sponsored one, unless they already have UK immigration status, and that's a separate, longer process.
• A workplace pension is compulsory. Auto-enrolment requires a minimum 3% employer contribution (8% total) on qualifying earnings, broadly the UK's counterpart to EPF, but you contribute as the employer regardless of where you're based.
• Holiday and contracts are statutory, not negotiable. 5.6 weeks' statutory paid holiday, an itemised payslip every pay period, and a written statement of terms from day one. UK notice and unfair-dismissal protections also differ from Indian practice: protection from ordinary unfair dismissal currently needs two years' service, falling to six months for dismissals taking effect on or after 1 January 2027.

Your three routes, and the one most Indian companies miss

However you hire, UK payroll runs one of three ways: your own UK PAYE scheme (an employer abroad can register one without a UK entity), a direct payment scheme (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 direct payment route, usually a DPNI for Indian employers, is the one most Indian 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 four quick questions to find yours.

Secondments and social security

If you're posting an existing Indian employee to the UK temporarily (rather than hiring locally), the UK and India have a Double Contributions Convention, signed in February 2026 and in force since 15 July 2026. It means someone moving between the two countries pays social security in one country at a time, and an employee posted temporarily to the other country can keep paying at home rather than starting again. That changes where contributions are due for a posting, alongside the visa requirement for anyone relocating. It's a detail worth getting right before the first payday.

UK payroll quick facts

Estimate the all-in cost of a UK hire with our free employer-cost calculator, or see what a UK employee really costs.

Common questions

Can an Indian company employ someone in the UK without a UK entity?

In most cases, yes. A company based in India with no UK presence can employ UK staff directly, usually through a DPNI scheme in the employee's name, or by registering for UK PAYE itself. 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. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts.

Does an Indian company pay UK employer's National Insurance?

Usually not, if it has no UK presence. Under HMRC's rules an employer owes UK employer's National Insurance if it is resident, present or has a place of business in Great Britain. HMRC list the UK's social security agreements that include employer obligations as those with the EU, the EEA EFTA states, Switzerland, the Isle of Man and Gibraltar. The UK-India social security agreement, in force from 15 July 2026, has no rule making an Indian employer liable for UK employer's National Insurance on someone hired locally in the UK. One exception: if your UK employee actually works for a UK business, such as a UK client you supply them to, that business may have to run PAYE and pay employer's National Insurance itself. For most employees, UK employer's National Insurance is 15% of pay above £5,000 a year.

Can an Indian company run UK payroll in its own name instead?

Yes, that's the other route. A company with no UK presence doesn't have to run UK PAYE, but it can choose to run it in its own name. Then the company takes the employee's income tax off their pay through its own payroll, and our fees are the company's cost, not the employee's. The employee's National Insurance still has to be paid: the company can pay it through its payroll if it's willing to and HMRC agree, and if not, the employee pays it directly.

What if we send an existing employee from India to the UK?

The UK and India have a social security agreement, signed on 10 February 2026 and in force since 15 July 2026, which deals with contributions only. An employee sent over temporarily by an Indian employer, for a posting not expected to last more than 60 months, can stay in the Indian system instead.

How soon can an Indian company pay its UK employee?

We'd allow four to eight weeks for HMRC to set the scheme up, and that's our own estimate, not a figure from HMRC. Nothing goes to HMRC until the engagement is signed and our identity checks are done, so our four to eight weeks starts then, not today. The scheme should be registered before the first payday. If pay starts before the scheme is in place, payroll still runs every payday and is reported to HMRC late once the scheme exists.

Working across the time zones

India is 4.5 to 5.5 hours ahead of the UK, so there's a useful overlap most of the working day: your afternoon is the UK morning. The practical fix is simple: you send approvals before the UK opens, we process on UK time and tell you exactly what to pay your employee in GBP, and when. UK payroll runs on UK statutory deadlines, RTI on or before payday and HMRC paid on time (quarterly on a DPNI, by the 22nd of each month on UK PAYE), which we track for you. We reply within one UK business day.

This 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.