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Sam_w
I assume this is going to be an always on machine, is the data going to be on here as well or a separate network drive? I'd be tempted to go for something like the HP Microserver, they're proven and very stable http://www.ebuyer.com/722189-hpe-proliant-gen8-g1610t-4gb-ram-microserver-819185-421 and cheap to buy and run.
This should be able to cope with transcoding single 1080p streams but if you're intending to look at 4k or transcoding multiple streams you'd need to look at something more powerful.
You can install Windows or Linux or whatever on there