Looking for Best Ways to Make Payments to Foreign Contractors? Full Guide Here 2024

Claire Millard
Ileana Ionescu
Last updated
23 September 2022

If you’re growing your UK business, you may need to bring in extra support for one off or long term projects. Hiring overseas contractors can be a great way to get the talent you need, when you need it - and as the world grows ever more connected, there are more and more ways to find the perfect foreign contractor for your position, too. Bringing in global talent can be cost effective, flexible, and allows you to have boots on the ground in other countries. That can bring you closer to customers and suppliers overseas, and help you bridge time zone clashes.

However, one downside to working with international contractors is figuring out how to run payroll. Pick the wrong method and paying foreign contractors can be an expensive hassle - but it doesn’t have to be.

This guide covers some of the best and most commonly used ways to make payments to contractors outside of the UK, to help you pick the one for you:

  1. Send money directly from your bank account

  2. Use a multi-currency account - try the foreign currency account from Wise

  3. Rely on PayPal

Key points

Each different way of paying foreign contractors from the UK has its own advantages and disadvantages. We’ll run through them in more details next - here’s a quick overview:

  • Sending money overseas directly from your bank - making a bank international transfer is reliable and usually relatively easy, but it can be slow and expensive

  • Make payments through a digital multi-currency account - a business multi currency account account can make it easier, faster and cheaper to pay overseas contractors, and also allows you to get paid by international customers in their own currency

  • Choose an online payment solution - online payment options like PayPal are commonly used by freelancers, but when it comes to international transfers, there are several fees which can push up costs for you or your team

Foreign payments through a bank account

If you’ve already opened a UK business bank account you may think that paying foreign contractors that way is the best bet. However, the costs of sending an international payment through your bank can be pretty staggering. To give an example, Barclays offers a great account for start ups which is described as offering free business banking. In truth, there are no monthly fees, and there are loads of different transaction types which are indeed free - making it a hot pick for new companies. However, when it comes to international payments, you’ll still be hit by fees.

This isn’t just about Barclays - sending money overseas with any bank can mean high, unexpected, or hidden fees. The overall costs depend on your bank and where you’re sending money to, but can include up to 3 different fees:

  • Upfront transfer fee

  • Exchange rate markup

  • Third party fees

In the case of the Barclays account we started with, SEPA transfers within Europe often don’t have any transfer fee. Sending money elsewhere online costs 15 GBP, while a manual payment in branch is 25 GBP.

Next you’ll have to consider the exchange rate markup, which is often about 3% - but not normally disclosed upfront by banks. Doesn’t sound too bad, but a 3% markup on a payment of 50,000 GBP would add a pretty painful 1,500 GBP in fees.

Finally, there are potential third party SWIFT fees. These arise when payments pass through the SWIFT network, and are paid to intermediaries involved in processing the transfer. SWIFT fees aren’t necessarily known upfront, which can mean your recipient gets less than you expect. Plus, the SWIFT network can be pretty slow - with payments often taking 3 - 5 days to arrive.

Pros and cons of using a bank transfer for international payments


  • Usually pretty easy to do online or in branch

  • Reliable and well know way of sending and receiving money

  • Send money more or less anywhere in the world


  • Fees can be high, and exchange rates usually include a markup

  • Slow delivery times

Multi-currency account 

As soon as you start bringing in foreign contractors, using overseas suppliers, or selling to international customers, you should consider getting a low cost online multi-currency account from a provider like Wise Business.

Multi-currency accounts let you hold, exchange, send and spend in a broad range of currencies - Wise covers over 50, as an example. Use your account to pay contractors and suppliers, and get paid by overseas customers in their preferred currency. You can then hold foreign currency balances and use them to pay bills internationally in future, or switch back to pounds when you want to within the account.

With Wise all currency exchange uses the mid-market exchange rate - usually the best available on the market. There are low transaction fees to pay, and you’ll get local bank details to get paid by customers for free from over 30 countries. Throw in the option to get linked international debit cards for you and your team, and Wise could really help you cut the costs of doing business across borders.

Pros and cons of the Wise multi-currency account


  • Hold, exchange, send and spend in a range of currencies

  • Make payments to contractors in 80+ countries with the mid-market exchange rate

  • Get linked debit cards to spend internationally with the real exchange rate


  • No branch network

  • You can’t add funds in cash or cheque

PayPal to pay foreign contractors abroad

Lots of contractors and freelancers pay and get paid through PayPal accounts, which offer a very convenient, and often instant way to move money from one account to another. All you need is an email to make a payment, and PayPal transfers can be made to more or less any country in the world. However, when it comes to paying contractors based overseas, PayPal’s fees may make it a less attractive option.

The exact costs you or your contractor will have to pay with PayPal will depend a bit on the account types you hold and where your contractor is based. If you send a payment in pounds to someone internationally, they’ll usually be able to receive it to their PayPal account. However, if they want to withdraw it to their normal bank account they’ll have to convert it using PayPal’s exchange service - which can include a hefty conversion fee. Conversion costs vary based on country but are usually 3% to 4%.

If you’d prefer, you can cover the cost of currency conversion yourself. Switch the money to the currency you need in your PayPal account and then send it that way. That’ll mean you pay the conversion fee - which is usually 3% from the UK. On top of that, there’s an extra fee of 2% if you’re making a PayPal Payout - a service designed to let you make multiple payments at once.

If that’s a feature that appeals to you, it’s worth shopping around as providers like Wise Business allow account holders to make batch payments to up to 1,000 people at once with no additional fees.

Find alternatives to PayPal

Pros and cons of using PayPal


  • No need to get your contractor’s bank details, only an email address

  • Send to almost every country in the world

  • Payments move instantly from one PayPal account to another


  • Exchange rates will include a currency conversion fee of 3% - 4%

  • There may be extra fees for the contractor to withdraw the funds at their end

What to consider before paying independent contractors

When you’re thinking about using foreign contractors for your business you’ll need to first figure out a few thorny problems:

  • Check you understand the relevant tax and employment law in the UK and in the contractor’s home country

  • Make sure you have a clear understanding with the contractor about what will be paid, how and when

  • Line up a payment method that works for both you and the contractor

Working with overseas contractors can throw up a few tax and employment law issues both in the UK and in the contractor’s own country. For example, you’ll need to make sure they’re counted as a contractor rather than an employee, both under HMRC rules for tax purposes, and under employment law in the UK. The situation may be slightly different again if you’re bringing in a worker through an intermediary or service company, because of HMRC off-payroll working rules (IR35). Understanding the legal situation here is crucial for both you and the contractor, as it can make a difference to employment rights, tax and legal status. Take professional advice if you’re at all unsure.

The next consideration is a more practical one - making sure both you and your contractor are very clear on the payment terms and conditions. You should have a written contract in place before work begins, which sets out full payment details, including payment methods, due dates, currencies, and what happens if things don’t work out - if work is late or not to standard, for example.

With your contract in hand, it’s over to you to make sure you’ve planned a payment method which lets you keep up your end of the bargain. You’ll have agreed payment due dates already, so now you need to decide how you’ll process transfers to your foreign contractor in a way that doesn’t cost you too much, and where payments will definitely arrive on time.

Benefits of hiring international contractors

The global pandemic has accelerated the move towards working online in the UK and around the world. And as more and more of us are comfortable with getting things done online, it’s easier than ever to recruit international team members and contractors who can work from wherever they call home.

Here are a few reasons why you might want to:

  • Using contractors gives flexibility to your business - from long term gigs to one off projects

  • Looking for contractors globally means you have the best possible chance of finding a perfect match

  • International contractors can be a great way to grow your business if you bring in people who are close to customers and suppliers overseas

  • International talent can be a cost effective way of getting skilled people into your business, for the short term or as a more permanent arrangement in future


Foreign contractors can be exactly what your business needs to grow. From bringing in new skills, to the flexibility of hiring people as and when you need them, contractors can make a huge difference to a growing business. And by looking for the best people on a global scale, you can hire individuals who fit your brand, and who are able to help your company grow internationally.

Use this guide as a starting point for some of the things you need to consider when using foreign contractors - including the best ways to pay international contractors from the UK. By picking the right payment method up front you’ll cut your costs and can get the very best return for your business.

Try Wise Business account


How do I pay someone from another country?

You may want to pay overseas contractors through international bank transfers, multi-currency accounts and payment gateways like PayPal. Compare a few to see which works best for you.

Can a UK company pay a foreign contractor?

Yes. However, you’ll probably want to get professional advice to make sure you’re fulfilling your UK obligations to HMRC, and following any relevant rules in the contractor’s own home country.

Are overseas contractors tax exempt?

Generally contractors are responsible for most of their own tax matters, but you may still have obligations to report payments or pay some benefits. Get professional advice before you start employing overseas contractors to check how the law applies in your specific situation.

Can you hire someone from another country to work remotely?

Yes. Hiring remote workers overseas can be a really helpful way to add talent to your business and reach international markets.