Hire employees and manage payroll in United Kingdom

Our guide to employing in United Kingdom.

Country Facts

The United Kingdom of Great Britain and Northern Ireland, is a member of the Commonwealth of Nations, the Council of Europe, the G7, the Group of Ten, the G20, the UN, NATO, the OECD and the WTO. It was a member of the EC/EU from 1973 until 2020. The UK consists of four countries: England, Scotland, Wales and Northern Ireland. The islands Isle of Man, Guernsey and Jersey are not part of the UK, and are known as Crown Dependencies. Around the globe there are also 14 British Overseas Territories. The UK has the world's fifth-largest economy, with a nominal GDP of 3.108 trillion USD in 2021. Its Human Development Index is at 0.932, classed as very high, and ranked as 11th in the world.

country

Capital

London

Currency

Pound Sterling (GBP)

Language spoken

English

Population size (2020)

67,21 million

Ease of doing business (world bank ranking)

8

Cost of living index(2021)

71,03

Payroll frequency

Monthly

VAT - standard rate

20%

GDP - real growth rate(2020)

-9,79%

Employing in United Kingdom

In order to register in the UK as an overseas company, registration is done at the so called Companies House, but this is only if you intend to have a base in the UK. The UK office of an foreign company, can either be established as a branch or as a subsidiary.

Once you employ a person in the UK, you’re obliged to provide an employer’s liability insurance, and companies who don’t will be fined on a continuous daily basis. Additionally, if the employee needs a work permit to work in the UK, a so called Employer Sponsorship Licence will be needed. Employers must also register with HM Revenue and Customs before the first payday. This process usually takes up to five days. This will yield your employer Pay As You Earn (PAYE) number which is your main reference with regards to tax payments in the UK.

Employees have a range of rights in the UK, which varies according to status, from a full employee to an agent or contractor. In general, employment regulations and rights are identical in England and Wales, whereas Scotland and Northern Ireland can differ on certain points. Always make sure you are up-to-date with the right regulatory framework.

Employment contracts don’t necessarily have to be written, although it is highly recommended. If written, a contract must detail: job title / description; location; pay; benefits; hours; holiday; notice period; training entitlements / requirements. Employees must also receive clear information where to access information regarding disciplinary and grievance procedures, as well as pension schemes, and sick pay.

National Insurance contributions (NIC) in the UK are divided based on employee categories. Each letter stands for a separate category. The most common is category A, and is the one which rates are listed for in the below sections. A: Employees not falling into any of the below categories. B: Married women/widows entitled to pay reduced NIC. C: Employees of State pension age. J: Employees who can defer NIC due to it being deducted from another job. H: An apprentice under the age of 25 years old. M: Employees under the age of 21 years old. Z: Employees under the age of 21 years old, who can defer NIC due to it being deducted from another job.

Furthermore, employer payroll contributions are split into a threshold system, stipulating limits based on monthly payroll: 520 GBP for the Lower Earnings Limit (LEL), 797 GBP for the Primary Threshold (PT), 737 GBP for the Secondary Threshold (ST) and finally 4,189 GBP for the Upper Earnings Limit (UEL), the Upper Secondary Threshold (UST) and the Apprentice Upper Secondary Threshold (AUST).

Generally, in the UK, employees cannot work more than an average of 48 hours per week, calculated over a 17-week period. For employees aged 18 or younger different rules apply.

List of Public Holidays - 2022

Date Holiday Name

3 January

New Years Day

15 April

Good Friday

18 April

Easter monday

2 May

Early May Bank Holiday

2 June

ASpring Bank Holiday

3 June

Platinum Jubilee bank holiday

29 Aug

Summer Bank Holiday

26 Dec

Boxing Day

27 Dec

Christmas Day (substitute day)

Minimum wage

United Kingdom has a government-mandated minimum wage. The hourly rates are £7.20 (aged 25+), £6.95 (aged 21–24), £5.55 (aged 18–20), £4.00 (under 18), £3.40 (apprentices aged 16 to 18 or aged 19 or older and in their first year).

Salary payouts

Salaries are most commonly paid out monthly in the UK, with the penultimate day of the month being a common pay day, although employers are free to move their payday to a different day or change how often employees are paid.

Taxes in United Kingdom

Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in United Kingdom.

Employer

Corporate income tax rate : 19%

Employer payroll contribution
(for Category A employee)

NIC letter A up to earnings at, or above Lower Earnings Limit, up to and including Secondary Threshold: 0.00%
OR

NIC letter A earnings above Secondary Threshold, up to and including Upper Secondary Threshold/Apprentice Upper Secondary Threshold: 13.80%
OR

NIC letter A Balance of earning above Upper Secondary Threshold/ Apprentice Upper Secondary Threshold: 13.80%

Employers Pension Contribution: 3.00%

Typical Total Employers Cost: 16.80%

Employee
(Category A)

National Insurance Rate

NIC letter A up to earnings at, or above Lower Earnings Limit, up to and including Primary Threshold: 0.00% OR

NIC letter A earnings above Primary Threshold, up to and including Upper Earnings Limit: 12.00%OR

NIC letter A Balance of earning above Upper Earnings Limit: 2.00%

Employees Pension Contribution: 5.00%

Employees Pension Contribution: 5.00%

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