If the contract contains express provisions apportioning the
earnings between work performed in the UK and work performed
overseas for the overseas employer, use these as the basis for
apportioning between UK and overseas employment.
In the absence of express provision in the contract of
employment, the method to use is that in the Apportionment Act
1870. This provides that salary accrues on a daily basis over 365
days. This will not be the same as the income tax calculation for
non-UK workdays.
Exclude 1 day’s worth of salary for each day working
overseas in the foreign employer’s business.
Mrs Patel is ordinarily resident in India and is sent to the UK
by her employer to work in the UK at the offices of a UK company
which is part of the group. She remains under contract to the
Indian employer and the Indian employer bears the cost of the
employment. Her salary is £100,000.
Her employer recalls her to India to advise on a hostile take
over for a period of 5 days - From 1 June until 5 June. The
substantial part of 2 of those days is spent flying to India and
back.
If Mrs Patel has an annual pay period, then the appropriate
fraction can simply be applied to her annual salary:
| Gross Pay | £100, 000 X 5/ 365 |
| Amount attributable to overseas workdays less | £1369.87 |
| NIC is operated on the gross pay attributable to the UK | £98,630.13 |
If Mrs Patel is monthly paid, the employer has to account for
NIC each month as a payment is made. In June, no NICs are due on
the salary paid in respect of the work in India.
The earnings on which NICs are to be calculated are those for
the month of June – after an apportionment to take account of
the 5 days which were not in respect of the employed earners
employment.
| Monthly salary | £8333.33 |
| less 5/365 x 100,000 worth of salary | |
| Amount attributable to non-UK workdays | £1369.87 |
| NIC is operated on the monthly gross pay attributable to the UK | £6963.46 |
