Hiring a UK employee from Japan: what Japanese companies need to know

If your Japanese 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 Japanese founders, finance and HR teams.

The five differences that surprise Japanese 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 Japan 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.
• Tax and National Insurance come off at source. UK payroll deducts income tax and National Insurance under PAYE, reported to HMRC in real time (RTI) on or before each payday, and your employee gets a payslip on or before each payday.
• 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 Japan 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 means a minimum 8% of qualifying earnings going into a workplace pension, of which you as the employer pay at least 3%.
• Holiday and contracts are statutory, not negotiable. 5.6 weeks' statutory paid holiday (which can include the UK's bank holidays), and a written statement of the main terms of employment on the first day of work.

Your three routes, and the one most Japanese 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 Japanese employers, is the one most Japanese 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 Japanese employee to the UK temporarily (rather than hiring locally), the UK and Japan have a social security agreement, signed in Tokyo on 29 February 2000, which deals with contributions only and has no benefit or health care provisions. Someone working in the UK normally pays only into the UK system. The exception is an employee insured in Japan who is sent here by an employer with a place of business in Japan, for a posting not expected to last more than five years: they stay in the Japanese system and do not pay UK National Insurance. If the employee has no certificate of coverage from Japan and cannot get one, UK National Insurance is due. That changes where contributions are due for a posting, alongside the visa requirement for anyone relocating.

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 a Japanese company employ someone in the UK without a UK entity?

In most cases, yes. A company based in Japan 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 a Japanese 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. Japan's is not one of them. 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 a Japanese 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 Japan to the UK?

The UK and Japan have a social security agreement, signed in Tokyo on 29 February 2000, which deals with contributions only. Someone working in the UK normally pays only into the UK system. The exception is an employee insured in Japan who is sent here by an employer with a place of business in Japan, for a posting not expected to last more than five years: they stay in the Japanese system and do not pay UK National Insurance. If the employee has no certificate of coverage from Japan and cannot get one, UK National Insurance is due.

How soon can a Japanese 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 with us from Japan

You send approvals by email, 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 October 2026. Your circumstances may differ, so please get specific advice before acting.