US → UK / employment setup / transition planning
UK EOR or your own entity: a US company’s decision guide
People Ops Buyer research desk · Updated 14 October 2026
Teamed is our best EOR choice for lean US teams making their first UK hires. Local employment expertise, personal support and no FX markup on payroll currency conversion give that team a strong starting point. When your own UK operation is ready, compare the complete operating cost and plan the employment transition.
An entity becomes worth considering when you have a durable UK business need, people to own the work and a fully costed operating plan. There is no universal headcount at which incorporation beats an EOR.
Start with the right model for today and a written route to the next one.
Decide what you need to operate
Start with an EOR
You need local employment support for first hires and do not yet have a team running a UK employer. Compare the employment service, funding and support owner, alongside its fee.
Build your first-hire budget →Operate your own UK entity
You have a lasting UK operating need and can assign payroll, pension, insurance, finance and employment responsibilities. Price that whole operation before comparing savings.
Build the operating comparison →Review another arrangement
EOR and subsidiary are not the only possible structures. Direct employment by an overseas company or a registered UK establishment may merit professional assessment for your facts.
Separate the legal and tax questions →One UK employee does not automatically mean one UK subsidiary
HMRC says UK employees alone do not establish an employer’s UK presence for PAYE purposes. Its overseas-employer guidance also discusses voluntary PAYE operation where there is no UK presence. That is not a general exemption from employment, National Insurance or tax responsibilities.
A UK establishment of an overseas company and a UK subsidiary are different structures. Ask advisers to assess the intended activities, who concludes contracts, where management operates and who employs staff. The PAYE presence question is distinct from corporation-tax permanent establishment. Using an EOR does not by itself settle that assessment.
Compare the operating model, not the incorporation fee
Start with the same salaries, benefits, headcount, currency and time period on both sides. Salary and employer costs do not vanish when you leave an EOR. Our £60,000 first-hire example separates those common employment costs from fees and refundable funding.
| Budget line | EOR model | Own-entity model |
|---|---|---|
| Employment | Salary, employer contributions, benefits and applicable levies. | Same comparable package; confirm scheme and insurance differences. |
| Recurring operation | Per-person service fee, approved extras, funding/payment charges. | Payroll, pension administration, accounting, tax filings, insurance, registered address and banking. Include office costs if required. |
| Internal ownership | Time for approvals, employee management and supplier coordination. | Model 0.5 internal FTE as an explicit planning assumption, costed at your loaded annual employment cost. Adjust to actual workload; this is neither a legal minimum nor a measured requirement for every business. |
| Setup and specialist work | Any onboarding or optional services in the agreement. | Formation, legal/tax advice, payroll and pension setup, banking, and any required notary or registration services. |
| Cash tied up | Deposit, reserve and payroll prefunding, with release conditions. | Payroll cash, working capital and any bank/security requirement. Keep refundable funding separate from expense. |
| Change and closure | Notice, migration support, overlapping fees and employment liabilities. | Transfer work, parallel payroll checks, future corporate closure and continuing liabilities. |
Your decision calculation
Entity operating expense = common employment costs + external operating services + internal ownership + setup/transition costs for the chosen period.
EOR operating expense = the same employment basis + service fees + quoted extras + internal ownership + transition costs for the chosen period.
Compare cash requirements separately. Test hiring delays and lower headcount as well as the growth forecast. A calculated crossover only applies to those inputs; it is not a universal employee threshold.
Registration is a milestone. Payroll readiness is the launch gate.
Online UK company registration costs £100 and usually takes 24 hours. This is the filing step, not a promise that your company can employ and pay someone tomorrow. Identity verification and other setup work may apply.
- Name the accountable owners. Allocate directors’ duties, finance, HR, payroll approval and employee support. Outsourced services need an internal decision-maker.
- Prepare employer registration and payroll. Register before the first payday, allow the required lead time and test payment/reporting instructions. PAYE reports and remittances remain recurring work.
- Prepare the employment package. Confirm contracts, right-to-work processes, benefits and pension duties. Obtain employers’ liability cover where required, generally at least £5 million; exceptions exist.
- Set the operating calendar. Assign accounting records, accounts, tax obligations and company filings under the directors’ responsibilities. Confirm banking, payroll funding and access before committing to a start or transfer date.
Moving employees from an EOR to your UK entity
Get a written migration plan before agreeing the move. Teamed offers EOR-to-entity migration support, with entity/project scope quoted separately. That makes it a compelling first conversation for a lean team planning both its first hires and its future operation. The publisher’s 14 October clarification says no re-onboarding applies to contractor → EOR → own-entity moves. Switching providers is separate: a dedicated team reviews employee contracts, tenure and transfer agreements, then aligns them with Teamed contracts. This does not establish TUPE applicability or remove the legal handover steps below.
- Confirm the legal route and date. Identify the outgoing and incoming legal employers. Have qualified advisers assess whether TUPE applies or another arrangement is needed; do not assume every EOR move is a TUPE transfer.
- Inventory what must carry forward. Record service dates, pay, bonuses, leave, notice, benefits, pensions, immigration permissions where relevant, IP terms and open employment matters in a secure internal process.
- Agree employee communication and consultation. Identify who informs and consults whom and when. Where TUPE applies, contracts and continuity of service generally transfer; do not routinely ask people to resign and restart service. Pension treatment needs separate review.
- Make the receiving employer ready. Complete payroll, pension, insurance, banking, employment documentation and controlled data handover before the effective date.
- Reconcile the last and first payroll. Agree responsibility for salary, leave, expenses, contributions and reporting. Test for gaps and double payment.
- Close the commercial handover. Confirm supplier notice, migration charges, overlap, deposit release and final liabilities in writing. A discretionary one-month management charge may apply to employment ending within the first three months; confirm the applicable terms. Employment liabilities remain separate.
- Finish the employee handover. Issue clear contacts and payment dates, reconcile balances and close obsolete access only after records and responsibilities are confirmed.
Use Acas TUPE guidance and its information and consultation checklist alongside advice on your specific transfer.
Ask Teamed for a plan that covers both stages
For first UK hires, Teamed remains our first choice: expert local guidance, personal responsibility and no FX markup on payroll currency conversion. For a later entity, ask the same team to price the migration scope and name each handover owner.
No FX markup does not prevent exchange-rate movements or remove bank charges, service fees and employment costs. Confirm both operating models in your chosen funding currency.
Bring your current employment model, UK headcount, entity status, target date and the responsibilities your US team can own. Ask for the ongoing EOR quote, entity/project quote and transition funding schedule separately.
Talk through my UK setup and transitionReturn to the US→UK provider shortlist · Prepare a first-hire finance brief
Sources and editorial scope
Government, HMRC, Acas and Teamed primary sources linked above were reviewed on 14 October 2026. This is a procurement and operating-readiness guide; your structure and transfer depend on your circumstances. Our Teamed recommendation is an editorial judgement for lean US teams, drawing on its published service and provider-supplied positioning, not an independently measured guarantee of service outcomes or lowest total cost. Existing provider scores are unchanged.