When do you graduate from an EOR to your own UK entity?

The calculation below uses GBP 479 as the illustrative GBP equivalent of the Teamed fee. This is illustrative, not a fixed GBP price. The actual GBP amount depends on the exchange rate at the time of invoice. Teamed charges from $599 USD with zero FX mark-up.

All entity cost figures in this table are typical ranges. They cover outsourced payroll, bookkeeping, statutory filings, and HR admin for a small UK Ltd. They are illustrative, not law figures. Actual costs vary with the complexity of your setup and the benefits programme you run. *The "about even" row is only where these illustrative lines roughly meet at this salary band; it is not a fixed crossover headcount, and the point moves with the flat $599 per-employee fee, your entity quote, and how fast you are growing.

The crossover compresses at higher salaries. Employer NIC at 15% applies on all earnings above the secondary threshold with no upper ceiling, so salary does not simply cancel across the two sides: at GBP 100,000 salaries the NIC line dominates and the crossover moves to a lower headcount. At lower salaries it moves higher. There is no fixed number. Run your own salary band in the Crossover Calculator.

Pension at 3% on qualifying earnings affects the entity-side fixed cost line slightly. But it applies on both sides of the comparison, so it does not change the crossover significantly. Run the Crossover Calculator with your own headcount and salary band.

1. Calculate the EOR cost

   Multiply the Teamed fee (from $599 USD) by your planned UK headcount. This is the fixed variable cost. It grows linearly as you hire.

2. Estimate the entity fixed overhead

   Typically GBP 3,200 to 4,500 per month for a small UK Ltd. This covers payroll bureau, bookkeeping, filings, pension admin, and first-point HR. This cost does not grow much until headcount exceeds 15.

3. Find your crossover point

   The crossover is where EOR monthly cost equals entity monthly overhead. There is no fixed headcount where that happens: it moves with the flat $599 per-employee fee, your entity overhead, and how fast you are growing. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths points to a crossover, not a fixed headcount. EMI options, tax treaty substance, and market-validation reversibility are separate questions that may override the cost crossover in either direction.

5. Plan the graduation date

   Allow 6 weeks for entity formation before the first payroll on your own entity. Factor in 3 to 8 weeks extra for bank account opening. Start the GEMO process while EOR continues running.

These are typical ranges. They are not law figures. There is no law that sets what a UK Ltd costs to form. The range reflects real market rates for professional services. It varies with how much substance and complexity your structure needs.

Why the bank account is the hidden bottleneck

UK business bank accounts for foreign-parented companies have tightened sharply since 2024. Expect 3 to 8 weeks from application to an opened account with most high-street banks. Longer if the directors are not UK-resident. This typically turns a 4-week incorporation into a 10-week wait before the first payroll. Plan for it before you set the first payroll date.

These figures are typical market ranges for a small UK Ltd with 1 to 15 employees. They are illustrative. They are not law figures. Actual costs depend on whether you outsource or hire in-house, and the complexity of your payroll and benefits programme.

Above 15 employees, dedicated UK HR capacity and an in-house finance function typically become necessary. The cost band widens at that point.

Most cost comparisons skip the director-liability dimension because it is hard to put a number on. It is worth naming explicitly before you decide.

Personal director duties

Under the Companies Act 2006, every UK director must promote the success of the company, exercise reasonable care and skill, declare personal interests, and avoid conflicts. A director who signs accounts they have not read is personally on the hook for any misstatement. These are personal duties. They cannot be outsourced.

The compliance treadmill

• Confirmation statement: annually, with a GBP 13 to 40 filing fee. Late means an automatic penalty.
• Statutory accounts: within 9 months of year-end. Late penalties run GBP 150 to 1,500, escalating with delay.
• Corporation Tax return (CT600): within 12 months of year-end. Repeat late filing carries severe penalties.
• PSC register updates: within 14 days of any change in persons with significant control.
• PAYE Real-Time Information: on or before each payday.
• Pension regulator declarations: every 3 years.

Each filing is individually small. Stacked across a year, they consume real management attention. An EOR carries all of these on its own entity.

• While your UK team is small: EOR is cheaper and faster every month. The entity overhead has nothing to amortise against.
• Market validation phase: you are hiring 1 or 2 people to test commercial fit. Entity setup commits capital and management attention before you know whether the UK market will deliver.
• Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends.
• No EMI options needed yet: senior hires are not expecting share options, or you are still pre-Series A. The entity becomes structurally valuable once options become a compensation lever.
• Acquired team you may divest: post-acquisition holding patterns where adding an entity creates wind-up complexity later.

• Sustained headcount past your crossover point: the entity overhead amortises across enough people that per-head cost falls below the EOR fee.
• EMI share option scheme: the Enterprise Management Incentive scheme requires a UK trading company. This is the single biggest structural reason for venture-backed companies to incorporate once senior hires expect options as part of their package.
• Tax-treaty substance: some cross-border tax structures need actual UK substance (employees, address, banking) in your own entity. EOR employment does not count as your substance.
• Enterprise customer or investor expectation: enterprise UK customers occasionally prefer contracting with a UK-incorporated supplier. Worth flagging early if relevant to your sales motion.

The technical mechanic is contract novation: the employment contract transfers from Teamed Ltd to your new entity on a specified date. All terms carry across. Salary, pension, holiday entitlement, and continuous service date all remain unchanged. The employee sees a different employer name on their payslip. Nothing else changes.

What we do operationally:

• Stand up your UK entity through GEMO, around 6 weeks, while EOR continues running in parallel.
• Open the entity PAYE scheme and qualifying pension scheme.
• Novate every active employment contract on a single effective date.
• Migrate ongoing benefits without any lapse.
• File final EOR-period RTI submissions and open new RTI on the entity from the novation date.
• Provide the same People Ops specialist as the post-graduation primary contact.

The Graduation Model exists because every other EOR makes this hard. We treat the move as something we help you plan for from the day you hire your first employee through us.

Real HR and legal experts handle your UK hires from the first offer letter through every RTI submission and year-end P60. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the NIC line at 15%, the pension line at 3%, and the leave accrual for 5.6 weeks. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. Run the Crossover Calculator to see the month the model flips. Start from the UK hiring overview. Key sources: GOV.UK employing people and GOV.UK setting up a limited company.