How to Hire Your First Employee in the UK (Without Breaking the Bank)
Hiring your first employee can feel terrifying — but it might also be the best move you ever make.
For many small business owners, especially those three or more years in, the decision to bring someone on board is a real turning point. Yet too often, people delay hiring because of the fear of costs, legal admin, or just not knowing where to start. The result? You end up stuck doing everything yourself, your workload keeps piling up, and your growth stalls.
If you’re a sole director or a small team thinking about taking on your first part-time or full-time employee in 2025–26, here’s everything you need to know — from spotting the signs you’re ready, to budgeting, to staying compliant with HMRC.
When is it time to hire your first employee?
If any of these sound familiar, it might be time to start your recruitment search:
- You’re turning away work because you can’t keep up.
- Burnout is creeping in and weekends are a myth.
- Your revenue is steady or growing, but admin is taking over.
- You’re doing £20/hour tasks when you could be billing £100/hour.
If you’re the bottleneck, your business isn’t growing. The right first employee will free you up to focus on higher-value work.
The true cost of hiring in 2025–26
Here’s the part that trips up many first-time employers — the real cost of hiring is more than just the salary. Let’s break it down.
Example:
Offering £25,000/year salary
| Cost Component | Approx. Amount |
| Gross Salary | £25,000 |
| Employer National Insurance (15% above secondary threshold) | £2,385 |
| Employer Pension (min. 3% of qualifying earnings) | £562.80 |
| Holiday Pay, Sick Pay, Bonuses | Allow ~£500+ |
| Payroll Software or Bureau Fees
Overheads & Other Benefits |
£200–£400/year 1,500
|
Total estimated cost: >£30,000
Legal & Tax Responsibilities
When you hire in the UK, you’ll need to:
- Register as an employer with HMRC.
- Set up payroll (we can help with this, or you can use software like BrightPay or Xero).
- Provide a written employment contract — templates exist, but it’s worth having them reviewed professionally.
- Auto-enrol eligible staff into a workplace pension (e.g. NEST).
- File RTI (Real Time Information) to HMRC every time you run payroll.
- Pay monthly tax and NI to HMRC.
It’s more paperwork than panic — with the right systems in place, payroll becomes routine.
Hiring Smart Without Breaking the Bank
Your first hire doesn’t have to be full-time from day one. Consider:
- Part-time roles
- Apprenticeships (with government incentives and no employer’s NI to pay)
- Freelancers or Virtual Assistants (VAs)
- Fixed-term contracts to trial the role
Top tip: Hire for clear tasks and measurable ROI — not just to fill a chair!
Virtual Admin Assistant vs. Employee – Which Is Best?
Sometimes outsourcing is the smarter move, especially at the beginning when testing or if you only need a few hours a week.
UK Virtual Assistant Rates in 2025:
| Type of VA | Hourly Rate | Typical Tasks |
| Freelance VA (Basic Admin) | £25–£35/hr | Diary management, data entry |
| Specialist VA (Bookkeeping, Marketing) | £35–£50+/hr | Skilled support |
| UK VA Agency | £35–£45/hr | Backup cover, structured service |
| Overseas VA | £5–£15/hr | Lower rates, but consider time zones, experience and cultural fit |
Annual Cost Comparison (20 hours/week):
| Option | Annual Cost |
| Full Time Employee (£25k + on-costs) | ~£30,000 |
| UK VA @ £30/hr | £30,000 |
| Overseas VA @ £10/hr | £10,000 |
Rule of thumb:
- Up to 15 hours/week of admin? Use a VA for flexibility.
- 20+ hours/week? Hiring in-house is often more cost-effective.
- Handling sensitive data or needing close team integration? Hire in-house, even part-time.
Mistakes to Avoid When Hiring
- Paying cash in hand (illegal and risky).
- Forgetting to budget for slower months.
- Hiring without a clear job description / induction process / goals for the role.
- Not taking HR advice from someone qualified to give it!!
- We can help here too as we have a number of contacts who specialise in this area, dependent on your needs and preferred style of working – simply email [email protected] for an introduction.
Final Word – And How We Can Help
Hiring doesn’t have to be scary — and staying solo forever might actually be riskier. The right first hire can unlock growth, reduce stress, and give you back your weekends.
If you’re considering your first hire in 2025–26 — whether it’s admin support, a junior consultant, or an operations manager — we can help you map the costs, compliance steps, and tax planning.
👉 Contact us if you need help deciding whether the time is right to hire your first employee, or with running the numbers to make your decision — let’s make sure your first hire is a boost, not a burden.
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