There are enough compliance issues to deal with when administering payroll in your own country, let alone running a second payroll overseas. You have to consider tax, social security and employment law to name just three areas. 

For organisations based in France, Germany or another country, working with experts like us allows you to cost-effectively delegate the worries of paying UK staff compliantly. This lets you concentrate on your core operations while we take care of the payroll admin.

Here are some of the main issues to consider for EU organisations employing people in the UK.

Setting up your presence

A key factor in determining your payroll obligations is what legal presence you have in the UK.

It’s clear cut that you will have a UK payroll obligation if you have a UK subsidiary entity and it employs people. If it is not a subsidiary the matter becomes whether you have another form of permanent presence. 

This can also often be clear for the likes of a UK sales office, which leads on sales, or a production facility. In these cases, you would also register to account for National Insurance and PAYE income tax.

Things become more opaque when, for example, employees are just working from home, or you have a UK sales office but it is not leading on negotiations. And double-taxation agreements may also sidestep the need for PAYE in certain circumstances.

Sometimes, paying income tax in the UK via PAYE might not be necessary but National Insurance is. It’s best to take advice on the best legal presence for your circumstances.

Dealing with HMRC/obligations

Assuming you do have a UK payroll need, you will need to register with HMRC, and comply with their real-time information protocols. As the name suggests, this means reporting activity as it happens. 

HMRC expects payment between 6th and 22nd (exclusive) of the month following the payment date. End-of-year reporting must be done when the tax year ends on 5 April. 

There are three main forms to consider for your employees. 

The P45 which captures someone’s leaving date, taxable pay to date in the year, tax paid and tax code. This is used at the start of employment when setting up and is reissued upon termination. 

The P60 is issued at the end of the tax year, showing final figures. 

And the P11D is for expenses and benefits.

Major considerations with payroll other than PAYE income tax and National Insurance include any auto-enrolment defined contribution workplace pension requirements and handling of statutory payments, such as sick pay or maternity/paternity pay, for which there’s a long list in the UK.

Benefits of outsourcing UK payroll

With so much to get right, both at the start and on an ongoing basis, the benefits of EU-based organisations outsourcing UK payroll to an expert adviser on these shores are clear. 

Not only do you save the time of having to carry out the administration yourself, but you also ensure your position is optimised and reduce the risk of things going wrong. 

If you are based in France, Germany, Italy or another EU or EEA country and would like to find out more, please get in touch to discuss your situation. We can talk about how we can help you both set up your UK payroll correctly and run it smoothly for you.