How an Overseas Company Registers for UK PAYE

You are a company based outside the UK, and you have hired someone who lives and works in the UK. This guide explains when an overseas company has to run UK payroll, how registration with HMRC (HM Revenue and Customs, the UK tax authority) works, and what happens next.

In short: an overseas company with a UK branch, agency or representative office is normally expected to operate PAYE. Without one, it can still choose to. Register with HMRC before your first payday (but not more than 2 months before), give HMRC a UK address it can write to, and you can name a payroll agent to deal with HMRC for you. HMRC then sends your employer PAYE reference and Accounts Office reference. See our prices for running it each month.

In this set-up, your company stays the employer. A payroll bureau like ours runs the payroll for you. We are not an employer of record (EOR) and not an umbrella company.

Two terms you need: PAYE and National Insurance

PAYE (Pay As You Earn) is HMRC’s system for collecting Income Tax from employees’ pay. It also covers National Insurance from employment. The employer works out the deductions, takes them from pay and sends them to HMRC.

National Insurance contributions (NICs) are the UK’s social security contributions. Employees pay them, and employers pay their own share on top. The employer’s share is called secondary Class 1 NICs.

Tax and National Insurance follow different rules, so we look at them separately.

Do you have to operate PAYE?

If you have a UK presence

HMRC’s guidance says that to be within the scope of PAYE, an employer must have a UK presence. HMRC treats a UK branch, agency or representative office as a tax presence. If you have one, HMRC can expect you to operate PAYE, even if you pay your UK employees from abroad.

HMRC says it would not treat an overseas employer as having a UK tax presence simply because it has employees in the UK. Using UK banking or legal services does not count either.

If you have no UK presence

You can still choose to operate PAYE voluntarily. The advantage is that your employee’s tax and National Insurance are then dealt with through payroll each time you pay them.

If you do not operate PAYE, other rules may apply:

If your employee works for a UK business that is not their employer, such as a UK client or group company, that UK business can be treated as making the payments. It may then have to operate PAYE.
HMRC also has schemes that an employee sets up to pay their own Income Tax and/or National Insurance. These are called Direct Payment and Direct Collection schemes. They move the paperwork onto your employee.

National Insurance has its own test

HMRC’s National Insurance guidance says an employer is liable for secondary Class 1 NICs if it is resident or present in Great Britain, or has a place of business there. A UK registered office will generally count.

If your employee is coming from the EU, Gibraltar, Iceland, Liechtenstein, Norway or Switzerland, special agreements apply. Workers usually pay social security in the country where they work. HMRC says the employer’s liability follows the employee’s. Where only National Insurance is due, and no UK tax, an employer can run a National Insurance only scheme.

These rules depend on your facts. Check your position with HMRC or a UK adviser before your first payday.

How to register

Timing

You must register before your first payday.
You cannot register more than 2 months before you start paying people.
If payday arrives before your PAYE reference does, you can still run payroll. You then send the report to HMRC as soon as possible after the reference arrives.

Online, by phone or by post

Most limited companies can register online on GOV.UK. The online service starts by asking whether at least one company director has a UK National Insurance number. Some types of scheme, such as a National Insurance only scheme, are registered by phone or post instead.

HMRC’s employer helpline is open Monday to Friday, 8am to 6pm UK time. The number is 0300 200 3200, or +44 151 268 0558 from outside the UK.

What HMRC asks for

HMRC’s internal guidance lists the details it uses to set up an employer record. For a limited company these include:

the employer name and any trading name
the business address and the nature of the business
the scheme start date (when employees start)
a contact name, telephone number and email address
the registered office, company registration number and company UTR (Unique Taxpayer Reference), where these exist
each director’s name and address, National Insurance number, UTR and date appointed, where these exist
the name and address of any payroll agent or person who should receive all correspondence

HMRC’s internal guidance also says a new employer record should be set up within 20 days of receiving the details. Allow extra time if letters are going by post.

A UK address and a UK agent

HMRC needs a UK address where it can contact the employer and send PAYE information. When you register, you can also name a payroll agent to receive all correspondence.

A UK agent, such as a payroll bureau or accountant, can fill this role. You can authorise an agent to deal with HMRC for you. Depending on the tax, this is done through an online service or on paper form 64-8. You stay responsible for your own tax affairs, even when an agent acts for you.

What happens after registration

HMRC sends a letter with two references:

Employer PAYE reference. This identifies your PAYE scheme with HMRC.
Accounts Office reference. This is a 13-character reference. You use it when you pay HMRC.

Then your monthly duties begin. You report pay to HMRC on or before each payday. This is known as RTI (Real Time Information). If you pay monthly, you pay HMRC by the 22nd of the next tax month. You also need a workplace pension for eligible staff. We cover these monthly obligations in more detail in a separate guide.

Frequently asked questions

Does an overseas company need a UK entity to run UK payroll?

Not necessarily. HMRC expects an employer with a UK presence, such as a branch, agency or representative office, to operate PAYE. An overseas company with no UK presence can still choose to operate PAYE voluntarily, so its employee’s tax and National Insurance are dealt with through payroll.

How long does it take to register as a UK employer?

HMRC’s internal guidance says a new employer record should be set up within 20 days of receiving the details. Allow extra time if letters are going by post. You cannot register more than 2 months before you start paying people.

Can a payroll bureau deal with HMRC for us?

Yes. You can authorise an agent, such as a payroll bureau or accountant, to deal with HMRC for you, and name a payroll agent to receive correspondence when you register. You stay responsible for your own tax affairs.

Are you an employer of record?

No. Payroll Service (UK) Ltd is a payroll bureau, not an employer of record or an umbrella company. Your company stays the employer, and we run the payroll.

How we can help

Payroll Service (UK) Ltd is a Cardiff payroll bureau, established in 2011. We run UK payroll for overseas companies with UK employees. You remain the employer. We run your payroll each month and, once you authorise us, deal with HMRC for you as your payroll agent.

To talk about your UK payroll, contact us or email jack@payrollserviceuk.co.uk. Our UK freephone number may not work from abroad, so email is best.

Sources

About the author: Jack Lloyd-Lewis is director of Payroll Service (UK) Ltd, a Cardiff payroll bureau established in 2011. The bureau runs weekly, fortnightly and monthly payrolls, pension auto-enrolment and CIS for UK employers, overseas companies with UK staff, and accountancy practices that outsource their clients’ payroll, using Sage 50 Payroll and BrightPay.

How an Overseas Company Registers as a UK Employer for PAYE