Payroll
/
United Kingdom
Global coverage
Available in +150 countries
Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
GBP £ (British Pound)
Employer contributions
15% National Insurance (on earnings above £5,000/year) + 3% minimum pension
Minimum wage
GBP 12.71/hour (2026) ≈ $2,923/month
Payment frequency
Monthly
Tax year: April 6 to April 5
Capital
London
Timezone
GMT (UTC+0)
Short answer: The minimum wage in the United Kingdom in 2026 is GBP 12.71 an hour (about GBP 2,203 a month, or $2,923). A typical full-time salary is around GBP 3,119 a month ($4,138).
| 2026 figure | Local currency | USD |
|---|---|---|
| Minimum wage, monthly | GBP 2,203 | $2,923 |
| Minimum wage, hourly | GBP 12.71 | $16.86 |
| Average salary, monthly (approx.) | GBP 3,119 | $4,138 |
Minimum wage details: National Living Wage age 21+ from April 2026 (up 50p from 12.21). 18-20: 10.85; 16-17/apprentice: 8.00.. USD figures use exchange rates from 1 October 2026. Updated October 2026.
Next step: estimate the full cost of an employee.
The UK has one of the largest contractor markets in Europe, and employer on-costs lighter than in most of the continent. So the case for contracting here is less about cost and more about speed, flexibility and not having to run UK payroll at all.
UK law also has three categories, not two: employee, worker and self-employed. Workers are entitled to the minimum wage and paid holiday even without an employment contract, so the label in the agreement is never the whole story.
Hiring through PAYE means registering as an employer with HMRC and reporting every payment in real time. On top of salary you carry:
The worked example further down this page shows the full monthly cost on a £5,000 salary.
A self-employed professional, or one working through their own limited company, invoices you and handles their own tax and National Insurance. You avoid PAYE registration, pension enrolment and a UK entity.
Ontop acts as contractor of record: a compliant contract (yours or an Ontop template), classification support and monthly payments. Contractors are paid into their Ontop Global Account in USD, and plans start at $49 per contractor per month. To compare both routes for a given salary, use the contractor cost by country calculator.
The UK tests status on substance. IR35 and the off-payroll working rules target contractors who work through their own company but would be employees if engaged directly. Medium and large clients must assess status themselves and issue a determination; for small clients, that responsibility sits with the contractor's company. If HMRC disagrees with the outcome, tax and National Insurance become due as if the person were employed. The rules for clients based outside the UK differ, so take advice for your case.
The signs are familiar: you control how and when the work is done, the person cannot send a substitute, and they work only for you. In that case, hire an employee. If the work is defined and the professional runs their own business, read how teams scale that way on our page on the alternative to an employer of record.
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~£5,690 GBP total (plus ~3% employer pension)
/month
For a gross salary of
£5,000 GBP gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
15% National Insurance (on earnings above £5,000/year) + 3% minimum pension
Mandatory extras
Discretionary Bonus
Monthly admin
PAYE monthly: calculate → submit RTI → pay HMRC by 19th/22nd of following month
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
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A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
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Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~£5,690 GBP total (plus ~3% employer pension)
Example gross salary
£5,000 GBP gross/month
~£3,550 GBP net (after income tax, NI and 5% pension)
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~£690 GBP (employer NI at 15%)
Employer contributions on that salary
Employer contributions
15% National Insurance (on earnings above £5,000/year) + 3% minimum pension
Employee contributions
8% NI (employee) + 5% pension (auto-enrolment min)
Total cost above gross
~16-18% above gross (employer NI + minimum pension)
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~£3,119 GBP
Per month
London
£4,500 - £7,500 GBP
~30%
Manchester
£3,000 - £4,500 GBP
~10%
Monthly gross. National average salary per year:
~£37,430 GBP
Minimum wage
GBP 12.71/hour (2026) ≈ $2,923/month
Paid:
Hourly
Extra pay
Discretionary Bonus
Performance-based, common in finance and tech
Varies
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
0% (up to £12,570) → 20% → 40% → 45%
Tax year:
Tax year: April 6 to April 5
Filing calendar
Monthly via RTI (Real Time Information)
Social security payments
January 31 (self-assessment) / via PAYE monthly
Income tax
By May 31
Employee tax certificate
P60
January 31
Annual return
Self Assessment Tax Return
Late payment penalties
Late PAYE: penalties from £100 to 4% of underpaid amount; late NI: interest + surcharges
Who collects what
HMRC
Tax collection, PAYE, NI administration
The Pensions Regulator
Auto-enrolment pension compliance
ACAS / Employment Tribunal
Employment rights and dispute resolution
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Annual Leave
28 days (including 8 bank holidays)
Public holidays
8 bank holidays
Sick leave
Statutory Sick Pay (SSP)
Statutory Sick Pay at the weekly rate set each April
Maternity leave
52 weeks (39 paid)
90% of average earnings for 6 weeks, then the statutory flat rate (or 90% if lower) for 33 weeks
The contracts you can use, and what ending an employment relationship costs.
Permanent
Permanent Employment Contract
Fixed term
Fixed-Term Contract
Independent contractor
Self-Employed / Contractor (IR35 rules apply)
Collective agreements
Collective Agreement
Ending employment
Redundancy Pay
How it is calculated
Statutory: 0.5-1.5 weeks per year depending on age
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
IR35 / Off-Payroll Working Misclassification
Risk Level: HIGH
Since April 2021, medium and large private sector companies must determine if contractors working through Personal Service Companies (PSCs) are actually disguised employees under IR35 rules. Incorrect determination leads to HMRC demanding full PAYE and NIC back-payments with interest and penalties.
Auto-Enrolment Pension Non-Compliance
Risk Level: HIGH
Employers must automatically enrol eligible workers (aged 22-66, earning over £10,000/year) into a qualifying pension scheme with minimum 3% employer contribution. Failing to enrol, calculate correctly, or re-enrol every 3 years triggers The Pensions Regulator fines starting at £400/day.
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Next topicOntop is the Global Workforce Engine for contractor teams: contracts, compliance documents and payments in 150+ countries.
150+
countries
$49
per contractor per month
1 run
to pay your whole team
USD
Global Account for every contractor
FAQ
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Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
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Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
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Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
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Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
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Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
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When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
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Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.