United KingdomThe UK is the most natural first international hire for a US startup: shared language, a deep senior talent pool, overlapping legal culture, and a workday that ends as yours begins. What surprises founders is the cost stack and the classification rules. Employer National Insurance runs 15% on most of the salary, and the IR35 off-payroll rules mean "we'll just keep them as a contractor" carries real risk once someone works like an employee.
Here's what you actually need to know.
Quick facts
| United Kingdom | |
|---|---|
| Currency | Pound Sterling (GBP) |
| Standard work week | 5 days, 48-hour legal maximum |
| Payroll frequency | Monthly |
| Employer statutory cost | ~18-23% on top of gross salary |
| Minimum wage | £12.71/hour (National Living Wage, from April 2026) |
| Probation | Up to 6 months (6 is the default) |
| Notice period | 1 week statutory minimum, up to 12 weeks with long tenure |
| 13th month pay | Not mandatory |
| Employees paid in | GBP, required by law |
First decision: contractor or employee?
Plenty of US startups start with UK contractors, and for a genuinely independent consultant with multiple clients, that works fine.
The UK is stricter about the line than most markets because of IR35, the off-payroll working rules. If someone works set hours, exclusively for you, under your direction, HMRC can treat the arrangement as disguised employment, with back taxes and penalties attached. The rough test is the same everywhere: if you'd be uncomfortable with them taking a second client, they're probably an employee. Confirm your specific setup with a UK accountant, because IR35 status depends on the details of the engagement.
When someone becomes core to the team, you convert them to a proper employee through an employer of record (EOR) or your own UK entity.
Paying contractors in the United Kingdom
The mechanics:
- Collect a W-8BEN before the first payment. It certifies the contractor is a non-US person, so you generally don't issue a 1099. Have your accountant confirm.
- Sign a real contract with scope, rate, IP assignment, and termination terms, written for English law rather than copied from your US template.
- Pay in USD or GBP, their choice. Contractors can invoice in either. Bank wires cost $25-45 each plus a hidden FX spread, so per-invoice wiring gets expensive fast.
Shor pays UK contractors over local rails at a flat disclosed 2% FX margin, for a $19/month per-contractor fee. Contracts, W-8BEN collection, and invoicing are built in.
Hiring full-time employees
Employer-side statutory costs on top of gross salary:
| Contribution | Rate (employer side) | Notes |
|---|---|---|
| Employer National Insurance | 15% | On earnings above the £5,000 secondary threshold |
| Workplace pension (auto-enrolment) | 3% minimum | Employee contributes 5% minimum; qualifying scheme required |
| Statutory Sick Pay | Varies | Employer-funded for qualifying employees |
Headline employer load: roughly 18-23% on top of gross salary. Employer NI went to 15% in April 2025 (up from 13.8%) with the threshold lowered to £5,000, which quietly added over a percentage point to the cost of most hires. Statutory rates change; confirm current figures with your accountant.
A few April 2026 changes to have on your radar, all now in effect: the National Living Wage rose to £12.71/hour, and under the Employment Rights Act 2025, Statutory Sick Pay became a day-one right (the three waiting days and the lower earnings limit were removed), paid at £123.25/week or 80% of average weekly earnings, whichever is lower. Paternity leave also became a day-one right. A good EOR runs the new tables for you.
Employees must be paid in GBP through PAYE, with Real Time Information (RTI) reporting to HMRC every pay cycle. That's law, not preference.
Leave and benefits
- Annual leave: 28 days (5.6 weeks), which may include the ~8 bank holidays
- Sick leave: Statutory Sick Pay for up to 28 weeks, from day one of sickness as of April 2026
- Maternity leave: 39 weeks paid (90% of earnings early on, then statutory rate), state-supported
- Paternity leave: 2 weeks, paid
- Public holidays: ~8 bank holidays
Beyond statute, competitive UK offers commonly add private medical insurance, enhanced pension contributions, income protection, life insurance, and a flexible benefits package.
Ending employment
The UK is not at-will. Expect:
- Statutory minimum notice of one week, rising to 12 weeks after 12 years of service. Professional contracts usually set a longer contractual notice, often one to three months, and the longer period governs.
- Statutory redundancy pay after 2 years of service: half a week's pay per year under age 22, one week per year for ages 22-40, and one and a half weeks per year at 41+.
- A final settlement covering accrued salary, holiday payout, notice or pay in lieu, and any authorized deductions.
Unfair dismissal claims are a real risk if process is skipped, and the Employment Rights Act 2025 is expanding day-one rights. Route terminations through a consultation rather than improvising.
Documents we'll collect from your employee at onboarding
National Insurance number, P45 or starter declaration (tax details from their previous job), right-to-work evidence, and a UK bank account for salary.
What it costs through Shor
- Contractors: $19/month each
- Full-time employees (EOR): $449/month each, PAYE, RTI filings, pension auto-enrolment, and statutory payments handled
- Your own UK entity: we run payroll on top of it for $60/month per employee, in the same dashboard
No setup fees, no annual lock-in, and the FX margin is a flat disclosed 2%. The pricing calculator shows the full UK math.
FAQ
Can I pay UK employees in USD? No. Salary must be paid in GBP through UK payroll. Contractors, however, can invoice in USD or GBP.
What is IR35 and should I worry about it? IR35 is the UK's off-payroll working regime. It targets people who work like employees but bill through an intermediary. If your UK contractor works fixed hours exclusively for you under your direction, get the arrangement reviewed, and plan the conversion to employment before it becomes a liability. This is fact-specific; confirm with a UK adviser.
What does an employer of record in the United Kingdom cost? With Shor, $449/month per employee, plus the statutory employer contributions (roughly 18-23% of gross salary) that any employer pays. Deel and Remote charge $599-699/month for the same coverage.
How fast can someone start? Contractors: same day, once the contract is signed and the W-8BEN is in. Employees via EOR: typically 5-10 business days after documents and signatures are complete, driven by right-to-work checks, HMRC starter setup, and pension enrolment.