Hiring a UK employee from the US: what American companies need to know

Your first UK hire from the US is simpler than it looks — once you know which of the three payroll routes fits, and where UK employment differs from what you're used to at home. Here's the practical version, written for US founders, finance and HR teams.

The five differences that surprise US employers

• There's no UK W-2 or annual withholding reconciliation ritual. The UK runs PAYE: income tax and National Insurance are calculated and deducted every payday, and reported to HMRC in real time (RTI). Year-end is light — a P60 for the employee, no W-2 season.
• "At-will" doesn't exist. UK employees get a written statement of terms from day one, statutory notice periods, and unfair-dismissal protection after two years' service. Budget for proper contracts — templates from your US handbook won't comply.
• The employer on-cost is National Insurance, not FICA. You'll pay employer NI of 15% on pay above £5,000/year — roughly double the employer's 7.65% FICA share, but with no separate state unemployment insurance to layer on top.
• Health insurance isn't the deal-breaker it is at home. The NHS covers your employee by default. Many employers add private medical cover as a perk, but it's optional — typical plans cost far less than US group health premiums.
• A workplace pension is mandatory. Auto-enrolment requires a minimum 3% employer contribution (8% total) on qualifying earnings — think of it as a compulsory, cheaper 401(k) with no matching strategy to design.

Your three routes — and the one most American 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). The DPNI route is the one most American 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.

The maths on a £75,000 London hire

Same employee, same employment cost — the route only changes the fees. Run your own numbers in the comparison tool, or check take-home for your offer with the salary calculators.

Secondments and social security

If you're transferring an existing US employee to the UK (rather than hiring locally), the US–UK social security ("totalization") agreement can change where social contributions are due for a temporary posting. It's a detail worth getting right before the first payday — we confirm the position as part of setup.

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.

Working across the time zones

UK payroll runs on UK deadlines — RTI on or before payday, HMRC paid by the 22nd. With a 5–8 hour gap to the US, the practical fix is async-first: you send approvals on your afternoon, we process on our morning, and nothing ever waits on a live call. We reply within one UK business day and hold early-evening UK slots that match the US morning.

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 — please get specific advice before acting.