UK Employer of Record vs Setting Up a UK Limited Company: Cost, Speed and Risk

A UK employer of record (EOR) becomes the legal employer of your UK staff, so you can hire employees in the UK without an entity of your own. A UK limited company gives you full control but also full responsibility: Companies House filings, director identity verification, PAYE registration, pension auto-enrolment, employer's liability insurance and every employment-law duty. For 2026 to 2027 the employer National Insurance rate is 15% above £5,000 a year per employee, and those statutory costs exist on either route. The real differences are set-up effort, ongoing administration, who carries liability and how cleanly you can exit. A single hire or a short project usually favors an EOR. A larger, permanent team usually favors a company. Confirm the decision with UK employment counsel and an accountant.

Table of Contents

1. Why this decision is about more than cost
2. The routes at a glance: EOR, UK limited company, UK establishment, contractors
3. What it takes to incorporate and keep a UK limited company
4. Becoming a PAYE employer
5. Employer duties from the first day
6. Statutory employer costs for 2026 to 2027
7. Side-by-side comparison: EOR vs UK limited company
8. Contractors, employment status and a UK establishment
9. Exit, redundancy and the Employment Rights Act timeline
10. Decision table and pre-decision checklist
11. Illustrative scenario (hypothetical, not a real client)
12. How Knit's EOR service handles this
13. Frequently Asked Questions
14. Glossary of Key Terms
15. About Knit
16. Related Reading

1. Why this decision is about more than cost

Most companies start the UK conversation with one question: which route is cheaper? That question hides three others. How quickly does the first hire need to start? How certain is the headcount? And who is on the hook if something goes wrong with payroll, pensions or a dismissal?

Statutory employment costs are the same whichever route you pick. Employer National Insurance, workplace pension contributions, holiday pay and sick pay attach to the employment relationship, not to the structure around it. An EOR prices those costs into its invoice. A company you incorporate pays them directly. So the comparison is not "statutory costs versus no statutory costs." It is "administration, risk and flexibility under route A versus route B."

This guide is written for a non-UK company with no UK presence that wants to employ people in the UK. It covers the two main routes, with short notes on contractors and on registering a UK establishment of an overseas company. Every rate and rule cited comes from a GOV.UK, Companies House, HMRC or Pensions Regulator page we checked in October 2026. Where an official page did not state a figure, we say so rather than guess. For an overview of the model itself, see our explainer on what an employer of record is.

2. The routes at a glance: EOR, UK limited company, UK establishment, contractors

Employer of record. The EOR is the legal employer in the UK. It issues the employment contracts, runs payroll, pays HMRC and administers statutory benefits. You direct the day-to-day work. Because the EOR employs the person, you do not need to incorporate, register for PAYE or arrange pension and insurance cover in your own name. You pay the EOR a fee on top of the employment costs it passes through. We do not quote fees here; they vary by provider and scope, and you should ask for a written breakdown.

UK limited company. You incorporate a subsidiary, appoint at least one director, register with HMRC as an employer and become the legal employer yourself. You control contracts, benefits and policies. You also own every filing and every compliance deadline. Our article on EOR versus entity set-up cost math walks through the break-even logic in general terms.

UK establishment of an overseas company. Instead of a separate subsidiary, the foreign company itself registers a UK branch or place of business with Companies House. The legal entity is still the overseas company, so its liabilities extend to the UK activity. We cover this briefly in section 8.

Independent contractors. Engaging a self-employed person is a different arrangement from employing someone, and it carries its own classification risk. It suits genuine project work, not a role that looks like a staff job. See section 8, and our guide to hiring a foreign independent contractor.

One adjacent option deserves a mention: a PEO. A PEO usually co-employs staff for a company that already has a local entity, which makes it a poor fit for a company with no UK presence. Our comparison of PEO versus EOR explains the distinction.

3. What it takes to incorporate and keep a UK limited company

Incorporating is only the first step. The larger commitment is keeping the company compliant for as long as it exists.

Incorporation requirements. According to the GOV.UK guidance on setting up a limited company, you must appoint a director, though you do not have to appoint a company secretary. You need at least one shareholder, who can also be a director. You must identify people with significant control (PSCs), for example anyone with more than 25% of shares or voting rights, and prepare governing documents such as the articles of association. The company needs a registered office and an email address, a company name that meets the naming rules, and a SIC code describing what it does. Registration itself is handled by Companies House. After registering, you add Corporation Tax services to the company's business tax account.

The same page describes records: a company must keep company and accounting records. It does not give filing deadlines or fees, so check the current Companies House fees and deadlines before you budget.

Director and PSC identity verification. Identity verification is now part of the picture for any foreign parent. The GOV.UK guidance on when you need to verify your identity for Companies House (last updated 30 July 2026) states that verification became a legal requirement on 18 November 2025. For a new company, each director's personal code is required as part of the registration filing. For existing directors, the code is provided with the company's next confirmation statement. PSCs have their own deadlines, which differ depending on whether the person is also a director.

Separate GOV.UK guidance on how to verify says the main route is online through GOV.UK One Login, using ID such as a biometric passport from any country. The bank-details and Post Office routes are tied to people living in the UK. A non-UK director who does not have a suitable ID may use an authorised corporate service provider, such as an accountant or solicitor, but the guidance does not set out how that works for overseas individuals in detail. If your directors are based outside the UK, confirm the practical route early, because a missing personal code can hold up a filing.

Confirmation statement. The company must periodically file a confirmation statement with Companies House confirming information such as directors, registered office and shareholders. The GOV.UK confirmation statement service page also notes that directors' personal codes are needed in the filing. It does not state a current due date on the page we reviewed, so diarize the date shown on the Companies House register for your company.

Annual accounts. The GOV.UK service page for filing company accounts states that directors must approve the accounts before they are filed, and that from 1 April 2028 you must use commercial software to file accounts with Companies House. Filing deadlines and penalties are not on that page. A UK accountant will set the calendar for you.

What this adds up to. A UK company is not a one-time purchase. It is a standing set of obligations: a registered office, an accountant, director verification, annual filings and tax registrations. Those obligations are reasonable for a team you plan to keep. They are heavy for one hire who may leave in a year.

4. Becoming a PAYE employer

A company that pays UK employees must operate PAYE. The steps below come from GOV.UK pages we reviewed in October 2026.

1. Register as an employer. The GOV.UK page on registering as an employer says you must register before the first payday to get your employer PAYE reference number, and that you cannot register more than two months before you start paying people. HMRC sends the reference by letter. Most limited companies with one to nine directors can register online. The page notes that if you pay someone before the reference arrives, you run payroll, store your Full Payment Submission and send a late one to HMRC.
2. Tell HMRC about each new employee. The GOV.UK guidance on taking on an employee says you must tell HMRC about a new employee on or before their first payday. You collect details to work out a tax code (from a P45 or HMRC's starter checklist), check whether the person has a student loan, enter the details in payroll software and report them in a Full Payment Submission.
3. Report in real time. Each payday, the GOV.UK running payroll guidance has you record pay, calculate deductions and employer National Insurance, produce payslips and send a Full Payment Submission (FPS) to HMRC. Each month you view what you owe from the 10th of the tax month, send an Employer Payment Summary by the 19th where needed, and pay HMRC by the 22nd (the 19th if paying by post). Tax months run from the 6th to the 5th. If you have no payments in a tax month, you must still send an EPS.
4. Keep the scheme alive. The same page warns that new employers can lose their PAYE scheme if they do not send a report to or pay HMRC in 120 days.

Late or missing FPS reports can trigger late filing notices and penalties, and can affect employees' income-related benefits such as Universal Credit. This is where first-time employers most often slip: a missed submission is a small error with a visible consequence for the employee.

Employment Allowance. The GOV.UK Employment Allowance eligibility page explains who may claim. Key points: a business doing less than half its work in the public sector can claim; if the company has only one director, that director must not be the only employee liable for secondary Class 1 National Insurance; workers whose earnings fall within the IR35 off-payroll rules are excluded; only one company in a group of connected companies can claim; and you can claim against only one payroll. The allowance is worth up to £10,500 for 2026 to 2027, per the HMRC rates page discussed below. For a new UK subsidiary that is one of several group companies, the connected-company rule is the one to check first.

5. Employer duties from the first day

Whether you or an EOR holds the legal-employer role, these duties exist. Under a UK company you handle them yourself.

Right to work checks. The GOV.UK right to work guidance requires you to check that an applicant is allowed to work in the UK before you employ them. Methods include an online share code check, a digital check through an identity service provider, or a manual check of original documents in the applicant's presence. Keep unalterable copies during employment and for two years after it ends. The page warns of a civil penalty for employing an illegal worker without a correct check but does not state amounts. It also reminds employers not to discriminate based on where someone is from, so apply checks consistently.

Written statement of employment particulars. Under the GOV.UK guidance on the written statement, the principal statement is due on the first day of employment, with a wider statement within two months. The principal statement covers items such as pay, hours, holiday entitlement, work location, probation terms and training. Day-one information also includes sick pay and procedures, other paid leave and notice periods. Changes must be notified within one month. If someone works abroad for more than one month, further details are required.

National Minimum Wage and National Living Wage. The GOV.UK minimum wage rates page lists the April 2026 hourly rates: £12.71 for workers aged 21 and over, £10.85 for ages 18 to 20, and £8.00 for under 18s and apprentices. These rates change every April.

Holiday. The GOV.UK holiday entitlement page says almost all workers are entitled to 5.6 weeks of paid holiday a year, capped at 28 days. Part-time workers with regular hours get 5.6 times their working week. Bank holidays may be counted toward the statutory minimum if the contract says so.

Sick pay. Statutory Sick Pay is £123.25 a week for 2026 to 2027, or 80% of average weekly earnings if that is lower, per HMRC's rates page. The GOV.UK Employment Rights Act timeline states that the SSP lower earnings limit and waiting period were removed from 6 April 2026.

Workplace pension. GOV.UK states employers must provide a workplace pension scheme for eligible staff from the date the first staff member starts work. The Pensions Regulator's guidance for new employers sets the sequence: choose a suitable scheme (start early), assess staff on the duties start date, enrol eligible staff, write to every worker within six weeks, and submit a declaration of compliance within five months. Eligible staff are aged 22 to State Pension age and earn at least £10,000 a year. GOV.UK's page on what you, your employer and the government pay shows a minimum of 3% from the employer and 5% from the employee (8% total) on a band of qualifying earnings of £6,240 to £50,270. That page does not state which tax year the band applies to, so confirm the figures with your pension provider.

Employer's liability insurance. The GOV.UK employers' liability insurance page says cover must be at least £5 million from an authorised insurer, and is needed as soon as you become an employer. You can be fined £2,500 for every day you are not properly insured, and £1,000 if you fail to display the certificate. Exemptions include employers of only close family members or of people based outside England, Scotland and Wales.

Data protection. An employer holds sensitive personal data: payroll, bank details, right to work documents and health information. UK data protection law applies. The Information Commissioner's Office explains that organizations using personal information must pay a data protection fee unless exempt. The page we reviewed does not list fee tiers, so check the ICO site for the current tier. Cross-border transfers of employee data between the UK and your home country need a lawful transfer mechanism; ask counsel to confirm yours.

6. Statutory employer costs for 2026 to 2027

The table below pulls the main statutory figures into one place. The sources are the HMRC rates and thresholds for employers 2026 to 2027 (page last updated 1 September 2026), the minimum wage page, the holiday page and the redundancy pay page. Figures are as of October 2026.

Two practical notes. First, the National Insurance rate is a percentage of pay above the threshold, so it scales with salary. Second, the pension figure is a minimum. Many UK employers offer more to stay competitive, and an offer that sits at the statutory floor may affect hiring.

Worked example. Employee A earns £60,000 a year. Employer NI is 15% of (£60,000 minus £5,000), which is £8,250. The employer pension minimum is 3% of (£50,270 minus £6,240), which is £1,320.90 on the band shown above. Together that is about £9,571 on top of salary, before holiday cover, sick pay, insurance and administration. The Employment Allowance could reduce the NI element if the company qualifies, but only once per group and only against one payroll. This arithmetic is illustrative and uses only the figures cited above.

7. Side-by-side comparison: EOR vs UK limited company

The table describes drivers rather than timelines or prices. Both vary by provider, by your advisers and by how prepared you are.

For a wider look at when each model pays off across countries, our global EOR executive guide covers total cost of ownership and compliance exposure beyond the UK.

8. Contractors, employment status and a UK establishment

Employment status. UK law recognizes employees, workers and the self-employed. The GOV.UK employment status page explains that status determines a person's rights and the employer's responsibilities, that tax status can differ from employment-law status, and that courts and tribunals make final decisions. The linked GOV.UK page on employees states that "all employees are workers, but an employee has extra employment rights," and that only employees get statutory sick pay, statutory redundancy pay, minimum notice and protection against unfair dismissal, among other rights. Indicators of employee status include regular hours, control over how the work is done, no right to send a substitute, and working at the business's premises with the business's equipment. The label in a contract does not decide the outcome. The working relationship does.

For a company that wants someone to work set hours under its direction, calling the person a contractor does not change the analysis. Misclassification can lead to unpaid tax and National Insurance, penalties and loss of employment rights for the individual to be corrected later.

IR35 and off-payroll working. If a contractor supplies services through their own limited company, the off-payroll rules may apply. GOV.UK's off-payroll working guidance says that in most cases the client is responsible for determining the worker's status, and where the rules apply the client should produce a status determination statement with reasons. A separate rule shifts responsibility to the worker's intermediary for small clients outside the public sector. The page does not address clients with no UK presence, and the size thresholds sit in linked guidance. If the rules apply, the deemed employer must deduct Income Tax and employee National Insurance and pay employer National Insurance. That is a meaningful cost on an arrangement that looked like a flat fee. A non-UK company using contractors in the UK should ask a UK tax adviser whether the rules reach its arrangement. Our guide on hiring abroad without a foreign entity covers contractor misclassification, permanent establishment risk and data issues in more depth.

UK establishment. An overseas company can register a UK establishment instead of incorporating a subsidiary. The GOV.UK guidance on overseas companies registered in the UK defines a UK establishment as a place of business or branch of an overseas company in the UK, and says registration is needed when the company has some degree of physical presence. Documents must be filed within one month of the establishment opening. An independent agent acting for the company does not count, nor does an occasional location such as a hotel used during periodic visits. Most overseas companies must deliver accounts to Companies House, and director identity verification is due by the anniversary of the establishment's registration.

The guidance does not say whether employees working from home in the UK create a UK establishment. That is a fact-specific question for UK counsel, and it overlaps with permanent establishment analysis for tax. A branch also keeps the legal liability inside the foreign company, which some boards prefer to avoid. For most companies hiring a handful of people, the choice is between an EOR and a subsidiary, not a branch.

9. Exit, redundancy and the Employment Rights Act timeline

Exit is where the two routes feel most different. With an EOR, the EOR is the employer in any dismissal or redundancy, follows UK procedure and manages the paperwork, though your instructions and conduct still matter. With your own company, the process is yours.

What applies today. GOV.UK's statutory redundancy pay guidance says an employee needs at least two years' continuous service to qualify. Pay is based on age bands (half a week, one week or one and a half weeks per full year of service), with service counted up to 20 years. For redundancies on or after 6 April 2026, weekly pay is capped at £751 and maximum statutory redundancy pay is £22,530. Claims are made within six months of the job ending. These are minimums. A contract or policy can promise more.

Unfair dismissal qualifying period. The Government's factsheet on the Employment Rights Act 2025 describes the current qualifying period for an unfair dismissal claim as two years, and says it will be reduced to six months. The GOV.UK timeline update for the Employment Rights Act (last updated 25 September 2026) gives the schedule. We list what the page says, with the caution that the page states all future dates remain subject to parliamentary processes and may change.

The text of the Employment Rights Act 2025 on legislation.gov.uk shows section 25, which covers the qualifying period and compensation, as not yet in force on the version we checked, which is current to 10 October 2026. So as of October 2026, the qualifying period change is scheduled, not live, and the GOV.UK timeline does not describe a day-one unfair dismissal right. Do not assume one.

Why this matters for the route choice. A six-month qualifying period shortens the window in which probation-stage dismissals carry no unfair dismissal exposure. Uncapped compensatory awards raise the stakes of a procedural mistake. A company running its own UK employment will want a documented probation review, a written performance process and counsel on call. An EOR does not remove the legal exposure of a poor decision, but it brings a defined process and a team that handles UK cases routinely. Either way, take UK employment counsel's advice before any dismissal.

10. Decision table and pre-decision checklist

Decision table by headcount and duration. These are starting points, not rules. Business plans and risk tolerance move the line.

Treat the numbers as prompts for a conversation with your advisers, not break-even points. Our cost-math article explains why break-even depends on the provider's pricing, the compliance burden and headcount certainty.

Pre-decision checklist. Work through these before you commit.

• Roles defined: job titles, pay, hours, location and reporting line for each UK hire.
• Employee or contractor: each role assessed against the GOV.UK employment status indicators, with reasoning documented.
• Headcount outlook: expected hires over 12 and 24 months, and what happens if the first hire does not work out.
• Right to work: how each candidate will be checked, and who keeps the records.
• Pay floor: salaries tested against the April 2026 National Minimum and Living Wage rates.
• Pension: who will select and administer the auto-enrolment scheme.
• Insurance: who will hold employer's liability cover at the required minimum.
• Entity route: directors identified, verification plan agreed, registered office and accountant lined up (company route only).
• Employment Allowance: connected-company and sole-director rules checked (company route only).
• Tax review: UK permanent establishment and Corporation Tax position reviewed by an accountant.
• Data: transfer mechanism for employee data between the UK and your home country confirmed.
• Exit: probation, performance and redundancy process agreed, with the 2026 and 2027 Employment Rights Act changes in view.
• Advisers: UK employment counsel and an accountant engaged before signing.

11. Illustrative scenario (hypothetical, not a real client)

Assumptions. A software company headquartered outside the UK, call it Company X, wants to hire three people in England: a sales lead (Employee A), a customer success manager (Employee B) and a support engineer (Employee C). All three are expected to work full-time, remotely from home offices. Salaries are £60,000, £48,000 and £42,000 respectively. Company X has no UK customers yet and expects to learn within 12 months whether the market justifies a bigger team. These figures are invented for illustration.

Statutory employer National Insurance (2026-27). Using the 15% rate above £5,000:

• Employee A: 15% of £55,000 = £8,250
• Employee B: 15% of £43,000 = £6,450
• Employee C: 15% of £37,000 = £5,550
• Total: £20,250 before any Employment Allowance

If a UK subsidiary qualified for the full £10,500 Employment Allowance (and no connected company had already claimed it), the net employer NI would fall to £9,750. Eligibility depends on the rules summarized in section 4, including the connected-company rule. Under an EOR, the arrangement for NI and any allowance is part of the provider's pricing and should be asked about directly.

Route one: UK limited company. Company X incorporates a subsidiary. Its directors, who live outside the UK, each need verified identities and personal codes. The company needs a registered office, a Corporation Tax registration, an employer PAYE registration before the first payday, a pension scheme, employer's liability cover, a payroll process and an accountant. Employee A starts first, and the team waits for the HMRC PAYE letter and scheme set-up before the first payroll. If the market disappoints after nine months, Company X must run any redundancy process itself. Nobody would yet have the two years' service needed for statutory redundancy pay, but the unfair dismissal qualifying period is due to drop to six months from 1 January 2027, so the process still needs care. Company X then either keeps the dormant subsidiary on the books with filings and accounts, or closes it.

Route two: EOR. Company X signs a service agreement. The EOR issues contracts and a day-one written statement, completes right to work checks, runs payroll and pension, and typically holds employer's liability cover as the employer (confirm this in the agreement). Company X manages the work. If the market disappoints, the EOR runs the legal process on its side, and Company X has no entity to close. If it succeeds, Company X can later move the three employees to its own subsidiary under a planned transfer, which is a separate legal exercise that counsel should structure.

What the scenario shows. The statutory costs are the same in both cases. The EOR route trades a service fee for speed of start, no entity upkeep and a cleaner exit. The company route trades set-up effort and ongoing administration for control and a lower marginal cost per hire once the team grows. Which wins depends on how certain Company X is about the market, which is exactly what it does not yet know.

12. How Knit's EOR service handles this

Knit's Employer of Record services let a company employ people in another country without setting up its own entity there. In broad terms, Knit acts as the employer, issues compliant employment contracts, runs payroll, handles statutory contributions and benefits, and manages offboarding when an employment ends. The client directs the work and the person's day-to-day tasks.

For the United Kingdom specifically, our UK employer of record page summarizes minimum wage, payroll taxes, leave, benefits and termination rules and explains where an EOR fits. Knit also offers Contractor of Record, Global Payroll and PEO services, plus entity registration, global tax, insurance and work visa support, which matter if you later move from an EOR to your own entity. If you want to understand how the UK service would work for your roles, start with the contact page and ask for a written scope of services, a breakdown of pass-through costs and the offboarding process. We do not publish prices or timelines in articles, because they depend on the role, the salary and the scope.

An EOR does not remove your responsibility for how you manage people. Your instructions, working conditions and conduct toward the employee still count, and permanent establishment and tax questions for your own company remain with you and your advisers.

13. Frequently Asked Questions

1. Can I hire employees in the UK without an entity?

‍Yes. An employer of record can become the legal employer of your UK staff, so you do not need to incorporate or register for PAYE yourself. You still direct the work and remain responsible for your own conduct and tax position. Have a UK accountant review permanent establishment and Corporation Tax questions for your company before the first hire starts.

2. Is a UK employer of record cheaper than a limited company?

‍It depends on headcount and time horizon. Statutory costs such as employer National Insurance and pension contributions are the same on both routes. The difference is the EOR service fee versus the company's fixed costs: accountant, filings, insurance and management time. For small or uncertain headcount an EOR is often the lighter commitment. For a larger permanent team, a company can cost less per head.

3. What do I need to set up a UK company to hire employees?

‍You need a director, at least one shareholder, a registered office and email address, a company name, a SIC code and registration with Companies House. Directors must verify their identity, and you must identify people with significant control. Then register as an employer with HMRC before the first payday, arrange a workplace pension, and take out employer's liability insurance.

4. What is the employer National Insurance rate in the UK for 2026 to 2027?

‍HMRC's rates page for 2026 to 2027 states a 15% employer rate on earnings above the secondary threshold of £96 a week, £417 a month or £5,000 a year. Some categories, such as employees under 21 and apprentices under 25, are 0% up to an upper threshold. Eligible employers can also claim up to £10,500 of Employment Allowance.

5. Do I need an employment contract from day one?

‍You need to give the principal written statement of employment particulars on the first day of employment, with the wider statement within two months, according to GOV.UK. It must cover pay, hours, holiday, location and notice periods, among other items. A contract exists once someone accepts a job offer, even if it is not written down, so do not leave the paperwork late.

6. Do UK employers need to enrol staff in a pension?

‍Yes. Employers must provide a workplace pension scheme for eligible staff from the day the first staff member starts. Eligible staff are aged 22 to State Pension age and earn at least £10,000 a year. The Pensions Regulator requires a declaration of compliance within five months of the duties start date, and employers can be fined for missed duties.

7. When does the unfair dismissal qualifying period change?

‍GOV.UK's timeline update says the unfair dismissal qualifying period is due to fall from two years to six months for dismissals from 1 January 2027. As of October 2026, legislation.gov.uk still shows the relevant section as not in force, and the page warns that dates may change. Check the position before any dismissal.

8. Can I use contractors instead of employees in the UK?

‍Only for people who are truly self-employed. GOV.UK says employment status depends on the working relationship, not the contract label, and that courts and tribunals decide. If the person works set hours under your control, expect employee treatment. Where a contractor works through their own company, the off-payroll (IR35) rules may apply, so take UK tax advice.

9. Does a UK branch avoid the need for a subsidiary?

‍It avoids a separate company but not the obligations. An overseas company with a UK place of business must register with Companies House within one month of opening, and still needs PAYE, pension and insurance if it employs staff. Liability stays with the overseas company. Whether remote employees create a UK establishment is fact-specific, so ask UK counsel.

10. Who handles right to work checks under an EOR?

‍Typically the EOR, as legal employer, completes the checks and keeps the records, but confirm this in the service agreement. Under a UK company, you are responsible. GOV.UK requires checks before employment starts, with records kept during employment and for two years afterward. A civil penalty applies for employing someone illegally, so the process matters under either route.

14. Glossary of Key Terms

• Employer of Record (EOR): A provider that becomes the legal employer of a worker in a country, handling contracts, payroll, taxes and statutory benefits while the client directs the work.
• Companies House: The UK registrar of companies, which handles incorporation, confirmation statements, accounts and director identity verification.
• Registered office: The official UK address of a company, held on the public register.
• PSC (person with significant control): An individual with, for example, more than 25% of a company's shares or voting rights, who must be identified at registration.
• PAYE: Pay As You Earn, the system under which an employer deducts Income Tax and National Insurance from pay and reports to HMRC.
• RTI / FPS: Real Time Information reporting, in which an employer sends a Full Payment Submission to HMRC each payday.
• Employer NI: Employer Class 1 National Insurance contributions, charged as a percentage of pay above a threshold.
• Employment Allowance: A reduction in an eligible employer's annual National Insurance bill, up to £10,500 for 2026 to 2027.
• Auto-enrolment: The legal duty to enrol eligible staff in a workplace pension and contribute to it.
• IR35 / off-payroll working: Tax rules that can treat a contractor working through their own company as an employee for tax purposes.
• UK establishment: A place of business or branch of an overseas company in the UK, which must be registered with Companies House.
• Qualifying period: The length of service an employee needs before claiming unfair dismissal.

15. About Knit

Knit People is a Canada-founded global employment and payroll provider, established in 2015, with about 11 years of experience, 4,000+ clients, coverage across 172 countries and regions, more than USD 600 million in annual payroll processed, 60+ owned entities and a China operations hub in Shenzhen (MSB license No. M23187879). Services include Employer of Record, PEO, Global Payroll and Contractor of Record, along with recruitment, background checks, entity registration, global tax, insurance and work visa support. To discuss UK hiring, contact the Knit team or read about our Employer of Record services.

16. Related Reading

• Employer of Record: United Kingdom
• What Is an Employer of Record?
• EOR vs Setting Up a Foreign Entity: The Cost Math
• PEO vs EOR: A Step-by-Step Guide to Choosing
• Hiring a Foreign Independent Contractor
• Global Hiring Guides
• Employer of Record: Hong Kong

This article is general educational information about employing people in the United Kingdom as of October 2026. UK employment, tax, company and pension rules, rates and thresholds change often, and the Employment Rights Act 2025 measures described here carry dates that may move. Applying them depends on your facts and on the part of the UK where staff work. Nothing here is legal, tax or immigration advice. Before choosing between an employer of record and a UK limited company, or acting on any figure, confirm the position with Knit's local team or a licensed UK employment lawyer and an accountant or tax adviser.