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 protection from ordinary unfair dismissal after two years' service, falling to six months for dismissals taking effect on or after 1 January 2027. Budget for proper contracts, because templates from your US handbook won't comply.
• The employer on-cost is National Insurance, not FICA. Where it's due, employer NI is 15% on pay above £5,000/year, roughly double the employer's 7.65% FICA share, with no separate state unemployment insurance to layer on top. It's due through an EOR or where you have a UK entity, branch or place of business, but usually not on a DPNI for a US employer with no UK presence.
• 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, and 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 (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 US employers, 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 four quick questions to find yours.

The maths on a £75,000 London hire

The route changes the fees, and it can change whether employer's National Insurance is due. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts. Run your own numbers in the Employer of Record cost 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 to UK social security ("totalization") agreement can keep them in the US system instead of UK National Insurance for a posting of up to 5 years, with a certificate of coverage from the US authorities. 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 a US company employ someone in the UK without a UK entity?

In most cases, yes. A US company 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 US 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 and US agreement 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 US 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 the US to the UK?

Under the UK and US social security agreement, someone employed in the UK comes under UK National Insurance only, unless one of the agreement's exceptions applies. The main exception is someone your company normally employs in the US, who is covered by US social security, and whom you send to work in the UK for a period not expected to last more than 5 years. In that case the certificate of coverage comes from the US side, from the Social Security Administration, and it proves that UK National Insurance isn't due.

How soon can a US 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

UK payroll runs on UK deadlines: RTI on or before payday, and HMRC paid quarterly on a DPNI or by the 22nd of each month on UK PAYE. With a 5 to 8 hour gap to the US, the practical fix is simple: 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 if you want a live call, ask and we will fix a time.

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.