Guide · UK subsidiaries of overseas parents
Overseas company with a UK subsidiary: your PAYE options
The UK entity is already there. That single fact changes which payroll route you are on, and it usually makes life simpler rather than harder.
The UK entity is already there. That single fact changes which payroll route you are on, and it usually makes life simpler rather than harder.
DPNI schemes exist for overseas employers with no UK presence at all. If your group already has a UK subsidiary or branch, and that entity is the employer, you are not on that route. You run an ordinary UK PAYE scheme, exactly as a British company down the road would. The distinction is commercial as well as technical, because the two are structured and priced differently.
| Your position | The scheme | How it scales |
|---|---|---|
| No UK entity, employing someone here | A DPNI in the employee's name, or an NI-only scheme in the employer's name for EU, EEA and Swiss employers | One DPNI per employee; one NI-only scheme can cover several staff |
| UK subsidiary or branch is the employer | Standard UK PAYE scheme, registered to the UK company, or to the overseas company through its UK branch | One scheme covers the whole UK team |
That second line is the good news: your fourth or fifth UK hire is a starter record on an existing scheme, not a fresh HMRC registration. Still deciding whether to incorporate? Read do you need a UK company to hire in the UK first, or DPNI vs DCNI if you are weighing the no-entity options.
Five steps, in this order. None is difficult, but all of them belong before your first payday, not after it.
Registration is usually the long pole, so build a few weeks of slack in and treat the first payday as the deadline everything works back from.
The obligations are the same for a foreign-owned UK company as for any other UK employer. There is no lighter-touch version for a small subsidiary.
| Obligation | When |
|---|---|
| Full Payment Submission to HMRC (RTI) | On or before every payday |
| PAYE and National Insurance paid over | By the 22nd of the next tax month, electronically (or quarterly, if you are eligible) |
| Pension contributions uploaded to the provider | Each pay period |
| P60 to every employee still employed at 5 April | By 31 May |
| P11D and P11D(b) for expenses and benefits | By 6 July for 2026/27 benefits. From April 2027 company cars, vans, car and van fuel and medical benefit must be payrolled instead, with most other benefits following in April 2028 |
On top of the salary itself, the employer pays secondary National Insurance at 15% on earnings above £5,000 a year, and at least 3% of qualifying earnings into the pension, with 8% going in altogether. Eligible employers can offset up to £10,500 of the National Insurance bill through the Employment Allowance, though the conditions are worth checking rather than assuming. For a subsidiary the one to watch is the group rule: if your UK company is part of a group of connected companies, only one company in the group can claim it. Those are the figures for the 2026/27 tax year, and they are all on our rates and thresholds page, with the detail in employer's National Insurance explained and the filing acronyms in RTI, FPS and EPS explained.
Once the scheme exists, the only open question is who operates it. A parent with a mature payroll function abroad often assumes it can absorb a handful of UK staff, and sometimes it can. What catches people out is that the UK rules are not the hard part on day one. They are the hard part in month seven, when a tax code notice arrives or a leaver needs a P45 in the week the finance team is closing the quarter.
For a UK team under twenty, outsourcing is usually cheaper once the software licence, the training and the risk of a late filing are counted honestly.
Our overseas-employer plan, for a group whose UK entity holds the PAYE scheme, starts at £225 a month plus £8 per payslip. Setup is a one-off £350. Those are the 2026/27 rates and there is no VAT to add. Salary, employer's National Insurance and the pension contributions sit outside that, and cost the same whoever runs the payroll.
A quick illustration
Picture a fictional packaging manufacturer in Penang that opened a small sales and service subsidiary in Warrington two years ago, employing five people there. Head office had assumed the UK five could be bolted onto its own payroll. In practice the UK entity needs its own PAYE scheme, its own pension scheme, RTI every payday and its two company cars reported, on a P11D by 6 July 2027 for the 2026/27 tax year and through payroll from April 2027. One scheme covers all five, run by a provider who is awake when Warrington is.
No. A DPNI scheme is for an overseas employer with no UK presence. Once there is a UK subsidiary or branch acting as the employer, the route is a standard UK PAYE scheme, registered to the UK company or, for a branch, to the overseas company through the branch.
No. One PAYE scheme registered to your UK entity covers the whole UK team, however many people you employ. That is the main practical difference from DPNI, where each employee has their own scheme.
It can, but it has to be done to UK rules. RTI reports are due on or before every payday, PAYE and National Insurance are paid to HMRC monthly (or quarterly, if you are eligible), and the workplace pension duties apply from the first employee. Most overseas parents give the work to a UK payroll provider rather than build that knowledge in-house for a small team.
From £225 a month plus £8 per payslip, with a one-off setup fee. Those are the rates for the 2026/27 tax year.
This page is general information, not tax or legal advice, and reflects the published rates for the 2026/27 tax year. Your own position may differ, so please check it or get advice before acting.
Tell us where the parent sits, how many people the UK entity employs and roughly what they are paid. We will tell you which scheme we expect to ask HMRC for and send you a fixed monthly fee. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts. Within one UK business day.
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