Paying overseas employees and contractors from the UK is one of the most common international payment challenges for growing businesses — and one of the most expensive when handled through a bank. UK businesses with staff in Europe, the UAE, India, the US or Australia face a recurring currency conversion cost on every payroll run. At a 2.5% bank margin, a business paying £15,000 per month in overseas salaries loses £4,500 per year before a single exchange rate moves. A currency specialist charges 0.3–0.8% and can fix the exchange rate for up to 12 months, turning a variable cost into a predictable one.
This guide covers exactly how to pay overseas staff and contractors from the UK, the currency tools available to manage FX costs, and the compliance points to be aware of. For the broader business FX picture see our guides on how to protect your business against currency risk and how exchange rates affect UK business profits.
Who This Guide Is For
This guide is for UK businesses that:
- Pay salaries or fees to employees or contractors based outside the UK
- Have remote team members in Europe (EUR), the UAE (AED), India (INR), the US (USD) or elsewhere
- Need to make regular monthly or project-based payments in foreign currencies
- Want to reduce the FX cost of overseas payroll and remove exchange rate uncertainty from their cost base
What Are Your Options for Paying Overseas Staff?
| Payment method | Best for | Typical FX margin | Forward contract available? | Speed |
|---|---|---|---|---|
| UK bank SWIFT transfer | Ad hoc large payments | 2–3% | No (SME clients) | 1–3 working days |
| SEPA transfer (EUR only) | Regular EUR payments within EEA | 1–2% | No | Same/next day |
| Global payroll platform (Deel, Remote) | Employed overseas staff | 0.5–1.5% + platform fee | No | 2–3 working days |
| Currency specialist | Any currency, any amount | 0.3–0.8% | Yes — up to 12 months | 1–2 working days |
For most UK businesses paying overseas contractors or employees, a currency specialist gives the best combination of rate, flexibility and cost certainty. See our guide on the best way to pay overseas suppliers from the UK for the broader comparison.
SWIFT vs SEPA: Which Transfer Method to Use
SWIFT is the global messaging network used for international bank transfers in any currency. It is the standard method for paying overseas contractors in USD, AED, INR, AUD, SGD and other non-European currencies. SWIFT transfers typically settle in 1–2 working days for major pairs. See our full SWIFT transfers guide.
SEPA (Single Euro Payments Area) covers transfers in euros between EEA countries plus Switzerland and the UK. SEPA transfers are typically same or next working day and cheaper than SWIFT for EUR payments. If you have contractors based in France, Germany, Spain, Portugal, Italy or elsewhere in the eurozone, SEPA is the faster and lower-cost route. See our complete guide to SEPA transfers.
See our guide on how long international bank transfers take to plan around payment deadlines.
The Currency Risk in Overseas Payroll
Every overseas payroll payment involves a GBP conversion at the rate on the day you make the payment. If your contractor is paid €5,000/month and GBP/EUR moves from 1.1490 to 1.10, the sterling cost of that salary rises from £4,352 to £4,545 — an extra £193 per month, £2,316 per year, per contractor. With three EU contractors, that is £6,948 per year in unbudgeted cost from a single exchange rate move.
The solution is a forward contract — fix the GBP/EUR, GBP/USD or other rate for 3, 6 or 12 months of payroll payments in a single call. Your monthly cost becomes completely predictable regardless of what the market does. See our guide on forward contracts for UK businesses and our full guide to understanding forward contracts.
Worked Example: UK Agency with European Contractors
A UK marketing agency has three contractors based in France, Germany and Spain, each paid €5,000/month. Total monthly EUR commitment: €15,000.
| Payment approach | Monthly GBP cost | Annual GBP cost | Annual saving vs bank |
|---|---|---|---|
| UK bank (2.5% margin, GBP/EUR 1.12) | £13,736 | £164,832 | — |
| Currency specialist spot rate (GBP/EUR 1.1490) | £13,055 | £156,660 | £8,172 |
| Currency specialist + 12-month forward at 1.1490 | £13,055 (fixed) | £156,660 (fixed) | £8,172 + full cost certainty |
The forward contract delivers the same rate saving as the spot transfer but also removes all exchange rate uncertainty from the annual payroll budget. The agency can forecast its exact contractor cost for the next 12 months on day one.
Currency by Corridor: What to Know
| Contractor location | Currency | Transfer method | Key rate pair | Rate forecast |
|---|---|---|---|---|
| Europe (FR, DE, ES, IT, PT) | EUR | SEPA (same day) | GBP/EUR | GBP/EUR forecast |
| USA | USD | SWIFT (1–2 days) | GBP/USD | GBP/USD forecast |
| UAE | AED (pegged to USD) | SWIFT (1–2 days) | GBP/USD drives cost | AED/GBP forecast |
| India | INR | SWIFT (1–2 days) | GBP/INR | GBP/INR forecast |
| Australia | AUD | SWIFT (1–2 days) | GBP/AUD | GBP/AUD forecast |
| Canada | CAD | SWIFT (1–2 days) | GBP/CAD | GBP/CAD forecast |
Managing the FX Cost: A Practical Strategy
Anthony Bull, CEO of Cambridge Currencies, notes: “The businesses that get this right are the ones that treat overseas payroll like any other fixed cost — they lock in the rate at the start of the financial year and stop thinking about it. A forward contract on three months of EUR payroll takes one phone call and removes a recurring FX cost that most business owners don’t even realise they’re paying.”
For regular monthly payments: A rolling forward contract structure locks in the rate for each month’s payment in advance. You call once, fix 12 months of payroll, and the conversion executes automatically on each pay date. See our guide on currency hedging for UK small businesses.
For project-based contractor payments: A spot transfer at a specialist rate is the simplest approach for one-off or irregular payments. For larger project fees, a limit order can target a specific rate and execute automatically when hit. Set a rate alert to be notified when your target rate is reached.
For businesses with both EUR income and EUR costs: Natural hedging — using EUR receipts from European clients to pay European contractors without converting — reduces net exposure. See our guide to receiving international payments as a UK business.
Compliance: Employees vs Contractors
The employment status of overseas workers affects how you pay them and what you are responsible for. This is a brief overview only — always take professional legal and tax guidance on your specific situation.
Overseas contractors (self-employed) — you pay a gross fee in the agreed currency. No UK PAYE, no UK NI contributions. The contractor is responsible for their own tax in their country. You should have a written contract in place. HMRC’s IR35 rules apply to contractors operating through personal service companies, but for genuinely overseas contractors working in their own country the position is more complex — take specialist advice.
Overseas employees (employed) — if someone is employed by your UK company but works overseas, you may have employer obligations in both the UK and the country where they work. This can include local social security contributions, local employment law compliance and payroll reporting. Many UK businesses use an Employer of Record (EOR) service for overseas employees to manage this complexity.
Currency transfers and HMRC — there are no reporting thresholds for outward international payments for the purpose of paying contractors or employees. However, large transfers may require source of funds documentation from your bank or payment provider. See our guide on international money transfer fees, limits and compliance.
Why Not Just Use Your Bank?
UK banks process international payroll payments but at significant cost. On top of the exchange rate margin (typically 2–3%), many banks charge a flat fee per SWIFT transfer of £15–25. For a business making 20 overseas payments per month, that is £300–£500 in flat fees alone before the exchange rate margin is added.
Banks also offer no forward contract facility for SME clients, meaning every payroll payment is made at the rate on the day — with no ability to plan or budget. See our guides on why banks give worse exchange rates, whether currency brokers are cheaper than banks, and our guide to bank wire transfer fees. All Cambridge Currencies transfers are processed via FCA-authorised payment partners, with client funds held in fully safeguarded segregated accounts.
Frequently Asked Questions
Can I pay overseas contractors in their local currency from the UK?
Yes. A currency specialist converts your sterling and sends the payment directly to the contractor’s local bank account in euros, dollars, dirhams or any other currency. See our guide on the best way to pay overseas from the UK.
How long does it take to pay an overseas contractor from the UK?
SEPA payments to eurozone contractors arrive same or next working day. SWIFT payments to other currencies typically take 1–2 working days. See our guide on how long international bank transfers take.
Can I fix the exchange rate for overseas payroll in advance?
Yes. A forward contract locks in today’s rate for up to 12 months of future payments. This is the most effective way to remove FX uncertainty from your overseas payroll budget. See our guide on forward contracts for UK businesses.
Do I need to deduct tax when paying overseas contractors?
Generally no for genuinely self-employed overseas contractors — you pay the gross agreed fee and the contractor handles their own local tax obligations. However, employment status rules and IR35 implications for PSC contractors can be complex. Always take professional tax guidance specific to your situation.
What information do I need to pay an overseas contractor?
For SEPA (EUR): IBAN and BIC/SWIFT code. For SWIFT (other currencies): account number, SWIFT/BIC code, bank name and address, and routing number for US payments. See our guide on routing numbers, account numbers and sort codes.
How much does it cost to pay overseas employees from the UK?
Via a currency specialist: 0.3–0.8% above the interbank rate, no flat SWIFT fees. Via a UK bank: 2–3% above the interbank rate plus £15–25 per transfer. On £15,000/month of overseas payroll, the difference is approximately £8,000–£12,000 per year.
Paying overseas employees or contractors and want to lock in a better rate and remove exchange rate uncertainty from your cost base? Speak to a Cambridge Currencies specialist by phone — we’ll set up a forward contract around your payroll schedule and handle every transfer directly to your contractors’ accounts. Request a free quote today. All transfers are completed by phone with a dedicated specialist. We work exclusively with FCA-authorised payment partners.
