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How to · Overseas employers

How to pay a UK employee when your company is based abroad

You run a company outside the UK, you have someone working for you in the UK, and now you have to pay them properly. Here are the three routes, what happens on each, and roughly what they cost.

Short answer: You do not need to open a UK company: a direct payment scheme, or registering your overseas company for UK PAYE, allows you to employ a UK worker directly without incorporating in the UK. If your company is abroad and you have one UK employee to pay, a direct payment scheme run for you usually fits best.

The situation

You run a company outside the UK. You have taken on, or are about to take on, someone who lives and works in the UK. You have no UK office and no UK company, and now you need to pay them properly, which in the UK means running Income Tax and National Insurance correctly and giving them a real payslip.

The good news is this is a solved problem with a standard route. You do not need to open a UK company, and you do not need to guess. Here are your options, plainly.

Your options

The three routes

1. Your own UK PAYE scheme

If your company already has a UK entity, a branch or a subsidiary, you run a normal UK PAYE scheme, exactly like any UK employer. If that UK presence is a branch or office of your overseas company, a direct payment scheme isn't available: HMRC can require PAYE to run through that presence. One scheme can cover several staff. With no UK entity your overseas company can still register for UK PAYE, though most employers with one UK hire use a direct payment scheme instead, and setting up a company purely to run payroll is usually overkill.

MOST COMMON

2. A direct payment scheme

A direct payment scheme (a DPNI) or an employer NI-only scheme lets you pay a UK employee compliantly without a UK company. Which one depends on employer's National Insurance: employers in the EU, the EEA and Switzerland usually owe it and use an NI-only scheme in the employer's name, while employers elsewhere with no UK place of business usually use a DPNI scheme, which is the employee's scheme, set up in their name, and we make the application. You stay the direct, overseas employer, and a specialist runs the scheme, the payroll, the reports to HMRC and the workplace pension for you. This is what most overseas employers with a single UK hire use. If your employee will work for a UK business, such as a UK client or group company, that business may have to run PAYE and pay employer's NI on their pay instead.

3. An Employer of Record

An EOR becomes the legal employer in the UK on your behalf, so the EOR carries the payroll and employer obligations. It is fast and hands-off, and you pay a premium for that, usually from about £445 a month per employee (four of the best-known Employer of Record platforms publish starting prices of about £297 to £519 per employee a month, with $599 (about £445) the most common, read 22 October 2026). An Employer of Record becomes the legal employer and takes on the employer's duties; we run the payroll while you stay the employer, so the fees pay for different things. It earns its fee for short-term or exploratory hires, or when you want zero UK obligations. For someone you are keeping, your own scheme is far cheaper. See Employer of Record cost vs your own payroll.

The obligations

What has to happen, whichever route you take

Paying a UK employee compliantly means the same core things, whoever runs it. The difference between the routes is not the obligations, it is who carries the admin and how much it costs.

For the full picture across every route, cost and obligation, read the cornerstone guide on employing UK staff from overseas.

The four that always apply

  • ✓ Income Tax and National Insurance worked out and accounted for. National Insurance is taken from each payslip; Income Tax goes through PAYE on your own scheme or a DPNI, or, on an NI-only scheme, through Self Assessment or a separate tax-only scheme.
  • ✓ Real Time Information (RTI) reports to HMRC on or before every payday. Not annual, every pay run.
  • ✓ Employer's National Insurance may be due on top of the salary. Broadly employers in the EU, the EEA and Switzerland owe it and many employers elsewhere with no UK place of business do not, but it is genuinely case by case, so we work it out from your facts rather than guessing.
  • ✓ A workplace pension. Auto-enrolment duties apply to UK employees, so the pension has to be set up and the employee enrolled if they qualify.

You do not need a UK company

This is the point people get stuck on. Hiring someone in the UK does not mean you have to incorporate here. Direct payment schemes exist precisely so an overseas employer can run compliant UK payroll with no UK entity. The employee is properly employed, HMRC gets what it needs, and you keep the direct relationship with your own employee. The exception is where the employee works for a UK business, such as a UK client or group company: that business may then have to run PAYE and pay employer's NI on their pay.

What that looks like in practice

Take a fictional logistics firm in Kuala Lumpur that has hired an operations coordinator in Bristol. There is no UK office and no plan to open one. The scheme goes in the coordinator's name, we run the payroll and the RTI, the pension is set up and the coordinator gets a normal UK payslip every month. The firm carries on managing its own employee. On a Malaysian employer like that we would expect no UK employer's National Insurance to apply, and we check that against the facts before we quote rather than assuming it.

Plan around this

The realistic timeline

The one thing to plan around is that a direct payment scheme is a manual application to HMRC, and it takes a little time to come through. So the move is to start it before the first payday, not on it. Get the scheme underway early, gather the employee's starter details, set up the pension, and the first pay run lands on time.

See the payroll setup timeline for overseas employers →

The simple version

If your company is abroad and you have one UK employee to pay, a direct payment scheme run for you usually fits best (a DPNI, or an NI-only scheme if your company is in the EU, the EEA or Switzerland): no UK company, full compliance, one named contact, and a fixed fee of £157 a month per scheme. There is a one-off HMRC scheme setup on top, £500 with the early-onboarding discount, or £750 standard. Salary, any employer's National Insurance and the pension are separate. Salary and pension are the same whoever runs the payroll, but employer's NI isn't: an EOR pays it and passes it on, while an employer with no UK presence on a DPNI usually owes none.

Tell us your situation and we will tell you which scheme we expect to ask HMRC for, whether any employer's NI applies in your case, and a fixed price, honestly, within one UK business day.

Common questions

Questions we get asked

Can I pay a UK employee if my company has no UK office?

Yes. With no UK presence there are a few HMRC schemes. For employers outside the EU, the EEA and Switzerland with no UK place of business it is usually a DPNI scheme, which is the employee's scheme, set up in their name, and we make the application. If your company is based in the EU, the EEA or Switzerland, employer’s National Insurance is usually due as well, and HMRC’s route is then an NI-only scheme, which is registered in the employer’s name rather than the employee’s, with the employee’s Income Tax going through Self Assessment or a tax-only scheme. If the employee will work for a UK business, such as a UK client or group company, that business may have to run PAYE on their pay instead. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts. Either way a specialist runs it, you pay your employee directly, and tax, National Insurance and pension are handled correctly, with no UK company needed.

Do I have to set up a UK company to employ someone in the UK?

No. A direct payment scheme, or registering your overseas company for UK PAYE, allows you to employ a UK worker directly without incorporating in the UK. You would only set up a UK company if you wanted one for other reasons, such as scale, local contracts or funding.

Do I pay UK employer's National Insurance as an overseas employer?

Sometimes. Broadly, employers in the EU, the EEA and Switzerland owe UK employer's (secondary) National Insurance, while many employers elsewhere with no UK place of business do not, but it depends on the specifics, so we work it out from your facts before we quote. We check this for you before quoting. See employer's National Insurance explained.

How much does it cost to run UK payroll for one overseas-employed person?

A DPNI or NI-only scheme run for you starts at £157 a month for one employee, plus a one-off HMRC scheme setup. That is a fraction of a typical Employer of Record fee, which starts at about £445 a month: four of the best-known Employer of Record platforms publish starting prices of about £297 to £519 per employee a month, with $599 (about £445) the most common, read 22 October 2026. Salary and pension are separate and the same whoever runs the payroll. Employer's National Insurance depends on who the employer is: an EOR pays it and passes it on, while an employer with no UK presence on a DPNI usually owes none.

Related guides

Read next

Tell us the situation and we will tell you the route.

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