Payroll & Employment Guide: United Kingdom

Hiring Guide

If you want to hire remote workers in the United Kingdom (UK), make sure to follow the local UK rules on minimum wage, employment contracts, pension contributions, and statutory benefits. Explore salaries, benefits, payroll taxes, employer costs, and the legal requirements for hiring in the UK.

Employee Benefits

Employers in the UK must offer certain benefits that are required by the country’s labour laws. Along with these mandatory benefits, many companies also provide additional perks to stay competitive and attract great talent.

Understanding both the required benefits and the extra perks helps employers create a better workplace and makes it easier to hire and keep the right people.

Mandatory Benefits:

• Statutory paid leave (28 days)
• Statutory Sick Pay (SSP)
• Maternity and paternity leave/pay
• National Insurance contributions
• Pension contributions under the UK auto-enrolment scheme

Leave Policies:

• Annual leave: Minimum 28 days
• Sick leave: SSP eligibility after defined criteria
• Parental leave: Up to 52 weeks maternity leave; 1–2 weeks paternity leave
• Shared parental leave: Optional transfer of leave between parents

Healthcare:

• Covered under the National Health Service (NHS)
• Many employers offer supplemental private health insurance as a benefit

Retirement Benefits:

• Automatic pension enrolment
• Employee and employer contributions based on statutory minimums

Social Security Contributions:

• National Insurance (NI) contributions by both employer and employee

Bonus & Incentive Programs

• Common in UK employment packages
• Performance bonuses, sales incentives, retention bonuses, stock options (for eligible companies)

Want a quick look at the employee benefits offered in the UK?

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Taxes in the UK

In the UK, employers are responsible for deducting Income Tax and National Insurance contributions (NICs) from employee earnings through the PAYE system. Depending on the type of income involved—such as dividends, royalties, —additional tax rules may also apply.

Income Tax is charged on all forms of remuneration, including salaries, wages, bonuses, and incentive payments. Employers use each employee’s tax code to calculate the correct deductions, as the code reflects their personal allowance and any additional taxable income.

When a new employee joins the organisation, PAYE deductions are applied automatically from their first payroll cycle, supporting accurate, compliant, and streamlined payroll administration.

Personal Income Tax Rates (2026)

The UK applies a progressive personal income tax structure.

• England, Wales, and Northern Ireland: rates range from 0% to 45%
• Scotland: operates its own bands, ranging from 19% to 48%.

Tax Allowances & Additional Tax Reliefs:

• Employees may benefit from several allowances and reliefs, including the personal tax-free allowance and specific reliefs such as the work-from-home allowance, where eligible.

Payroll in the United Kingdom

In the UK, employers can run payroll on a weekly, monthly, or custom cycle, provided the pay period does not exceed 31 days. During each pay reference period, employees must receive at least the statutory minimum wage applicable to their age group.

Employee pay must be stated in the employment contract and issued in GBP. Most organisations pay salaries at the end of the month, and monthly pay is typically spread across 12 equal periods — the UK does not operate 13th- or 14th-month salary practices.

Both National Insurance and workplace pension contributions are compulsory for eligible employees. While contribution thresholds and upper limits apply, employers must ensure deductions and employer contributions comply with UK payroll rules.

Salary Payment Deadline

• Typically, monthly, on a fixed date
• Weekly payroll is permitted, but less common

Taxes & Contributions Deadline

• PAYE (Pay As You Earn) is deducted from each payroll run
• Employer NI contributions submitted concurrently

Payroll Declarations

• Monthly: Real-Time Information (RTI) submissions to HMRC
• Quarterly: No standard quarterly obligations
• Annual: Year-end employer declarations (P60, P11D for benefits, if applicable)

Payroll Currency

• GBP (Pound Sterling)

Looking for detailed guidance on payroll cycles, minimum wage rules, and statutory deductions in the UK?

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Legal Regulations

UK labour laws are defined through key employment legislation, including the Employment Rights Act. These regulations set standards for employment status, minimum wage, working hours, statutory benefits, and workplace protections.

Total Employment Cost:

• Employer's National Insurance contribution: 15%
• Employees' National Insurance contribution: 8% (plus an additional 2% for higher earners)

Minimum Wage: £12.21 per hour (2026 reference)

Probation Period:Commonly, 3 to 6 months

Want to learn more about the UK’s rules on employment types, employer responsibilities, and working conditions?

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Work Permits & Visas for the UK

Anyone from outside the UK must hold a valid visa or work permit that matches their job role and qualifications. The type of visa required, the application steps, and the associated costs will depend on the individual’s nationality, skill set, and employment contract.

Types of Permits

• Skilled Worker Visa

Process Length: Typically 3–12 weeks, depending on category and documentation

Need more information on UK visas and work permits?

Learn more.

Employer of Record (EOR) Services in the UK

With EOR services, you can hire employees in the UK without establishing a local legal entity. Your EOR becomes the legal employer while you manage day-to-day work.

Your EOR handles:

• Legally compliant employment contracts
• Payroll processing & monthly salaries
• PAYE, NI, and tax withholdings
• Benefits administration & statutory obligations
• Employee onboarding & offboarding
• HR documentation & compliance monitoring

EOR in UK

Payroll Calculator

Dhi ADT provides a payroll calculator tailored to the UK’s employment and payroll regulations. You can quickly and easily estimate gross and net salaries, employer and employee contributions, and all other mandatory deductions.

Go to Calculator