The United Kingdom is made up of four countries: England, Scotland, Wales, and Northern Ireland.
Payroll and Benefits Guide - United Kingdom
Fun Facts
The UK has a constitutional monarchy, with Queen Elizabeth II as the current reigning monarch.
London, the capital of the UK, is home to the iconic Big Ben and the Tower of London.
The UK is known for its rich history, with landmarks such as Stonehenge and Buckingham Palace.
Football (soccer) is a hugely popular sport in the UK, with passionate fans and historic clubs.
The Beatles, one of the most famous bands in history, originated from Liverpool, UK.
Contributions
Employee Payroll Tax
| Contribution Type | Rate |
| Pension Contribution | Workplace pension 5.00% |
| NIC letter | 0.00% |
| NIC letter | 12.00% |
| NIC letter | 2.00% |
Employer Payroll Tax
| Contribution Type | Rate |
| Employers Pension Contribution | Workplace Pension-3.00% |
| a levy designed to boost essential training and development of apprenticeship programs. | Apprenticeship Levy-0.5% |
| Earnings at or above lower earnings limit up to and including secondary threshold. | 0.00% |
| Earnings above primary threshold up to and including upper earnings limit | 12.00% |
| Earnings above secondary threshold up to and including Freeport upper secondary threshold | 13.80% |
| Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans | 13.80% |
| Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans. | 13.80% |
Payroll
Payroll Cycle
The payroll cycles are Monthly.
13th Salary
In the United Kingdom, there are no statutory provisions for 13th-month salary payments.
Work Hours and Week
The standard working week in the UK is 40 hours, but workers can opt out of the 48-hour limit imposed over a 17-week period.
Overtime
All work above the standard working hours per week is to be paid as overtime and is regulated by employment contract/collective agreements etc.
Leave
Paid Time Off
The annual leave entitlement is 20 working day of paid leave per year for full-time employees
Public Holidays
There are eight public holidays in the UK, known as bank holidays, which are recognized nationwide.
Sick Days
Employees can receive up to 28 weeks of paid sick leave
Maternity Leave
In the United Kingdom, female employees receive 52 weeks of statutory maternity leave and 26 weeks of ordinary leave, followed by 26 weeks of additional maternity leave.
Mothers are compensated by Statutory Maternity Pay (SMP) for up to 39 weeks at the rate of 90.00% of the employees average weekly earnings for the first six weeks, and 156.66 GBP or 90.00% of the employee’s average weekly earnings, whichever is lower) for the following 33 weeks.
Paternity Leave
Employees in the UK are entitled to one to two weeks of paid paternity leave, with statutory paternity pay of 172.48 GBP per week, or 90.00% of their average weekly earnings, whichever is lower, if they meet the eligibility criteria.
Parental Leave
Parents in the UK can take Shared Parental Leave (SPL) for up to 50 weeks, sharing 37 weeks of pay, following the birth or adoption of a child, with leave to be taken within the first year of the child’s arrival.
Termination
Termination Process
Termination procedures in the UK depend on the employment and collective agreements, with fairness determined by the reason and conduct of the dismissal.
Notice Period
Statutory notice periods for redundancy range from one week to 12 weeks, with dismissals for gross misconduct possible without notice, and employers having the option to provide payment in lieu of notice.
Severance Pay
Severance pay is only required in the case of redundancy. The amount of severance is dependent on the age of the employee, if they have served at least two years of service:
- Half a week’s pay for each full year for employees under the age of 22
- One week’s pay for each full year for employees between the ages of 22 to 41
- One and half weeks’ pay for each full year for employees over the age of 41
- Length of service is capped at 20 years
- Weekly pay is capped at 571 GBP
Severance is not required in regular termination cases.
Probation Period
Probation Period
Probation periods in the UK are determined by the employment contract and typically range from three to six months with no statutory provisions.
Immigration
Employers in the UK must meet visa requirements and obtain a sponsor license to hire workers from outside the country; the end of the Brexit transition period in 2021 marked the end of free movement between the UK and EU.
The UK’s immigration system treats all applicants equally, and citizens of the EU, Switzerland, Norway, Iceland, and Liechtenstein can apply for the EU Settlement Scheme. Visitors from abroad can stay in the UK for up to 6 months without a visa for various purposes.
The UK offers various work visas for different durations, requiring specific information on skills, qualifications, job sponsorship, and potential family relocation.
For Work Permits
Tier 2 (General) Visa
Tier 2 (Intra-Company Transfer) Visa
Tier 5 (Temporary Worker) Visa
VAT
The standard rate of VAT in the United Kingdom is 20.00%