National Insurance abroad - A guide for employers of employees from abroad

 

Contents

  • Who pays Class 1 National Insurance contributions?
    - Liability for Class 1 National Insurance contributions
    - National Insurance contribution type
    - The contract of service
    - If the employer is abroad
    - Special arrangements for EC/EEA member states and certain other countries
    - Further information
  • How to pay
    - British employer
    - Overseas employer
    - Agent in Great Britain will pay National Insurance contributions

About this leaflet

These pages are a guide to National Insurance contributions for employers of employees from abroad.

Further information about the National Insurance position of people who work in Great Britain1 for an overseas employer is given in the following leaflets:

CWG2 Employer's Further Guide to PAYE and NICs.

This leaflet is available from your nearest Social Security office or Inland Revenue (National Insurance Contributions) office

CA65 National Insurance contributions for people working for embassies, consulates and overseas employers.

This leaflet is available from:

Inland Revenue
National Insurance Contributions Office
International Services
Longbenton
Newcastle upon Tyne
NE98 1ZZ

or

Your nearest Inland Revenue (National Insurance Contributions) office.

The information in leaflet CA65 National Insurance contributions for people working for embassies, consulates and overseas employers applies if an overseas employer has no office or agent in Great Britain1 to arrange the payment of National Insurance contributions.

Who pays Class 1 National Insurance contributions?

Liability for Class 1 National Insurance contributions

Liability for Class 1 National Insurance contributions occurs if a person works:

  • in Great Britain1 under a contract of service or
  • in an office with emoluments which are taxable under Schedule E.

Full details are given in leaflet CWG2 Employer's Further Guide to PAYE and NICs.

National Insurance contribution types

Class 1 National Insurance contributions are made up of two parts:

National Insurance
contribution Paid by

Primary Employee

Secondary Employer

1. If you live (or were living) in Northern Ireland before going abroad, read Northern Ireland where Great Britain1 is mentioned throughout this leaflet.

The contract of service

Whoever the employee's contract of service is with, is liable to pay secondary National Insurance contributions.

Look at the precise terms of Great Britain1 employment to see if the contract of service is:

  • still with the previous overseas employer or
  • now with the 'host' employer to whom the employee has been 'attached' or 'seconded'.

If you are unsure where a contract of service lies, please contact your nearest Inland Revenue (National Insurance Contributions) office.

If the employer is abroad

Employer

An employer of a person working abroad only has to pay secondary National Insurance contributions if they:

  • have a place of business in Great Britain1 or
  • are resident or present in Great Britain1.

This applies even if the employee is liable to pay primary Class 1 National Insurance contributions.

However, the employer can volunteer to pay the secondary National Insurance contributions if they wish.

'Host' employer

The 'host' employer is the liable secondary contributor if:

  • workers are seconded to a United Kingdom subsidiary or associate 'host' employer by a foreign employer after 6 April 1994 and
  • the foreign company does not have a place of business in the United Kingdom.

Special arrangements for EC/EEA member states and certain other countries

Special rules apply if the employee came from:

  • a European Community (EC)/European Economic Area (EEA) member state or
  • a country the United Kingdom has a reciprocal Social Security agreement with.

Further information

See leaflet CWG2 Employer's Further Guide to PAYE and NICs for details of:

  • the countries concerned and
  • other leaflets which describe each individual agreement.

Working out Class 1 National Insurance contributions

If liability for Class 1 National Insurance contributions exists, work out the earnings-related National Insurance contributions on the gross earnings in the employment.

1 If you live (or were living) in Northern Ireland before going abroad, read Northern Ireland where Great Britain is mentioned throughout this leaflet.

You do not need to compare this assessment with Inland Revenue's, who charge income tax at different percentage rates.

Earnings paid outside United Kingdom

It makes no difference where or by whom, the employee is paid.

For example, if part of the earnings are paid outside the United Kingdom, or earnings go to dependants overseas, you must add these earnings to payments made in the United Kingdom.

Take action as in leaflet CWG2 Employer's Further Guide to PAYE and NICs para 122 if:

  • the whole payment is made outside the United Kingdom or
  • not enough has been paid in this country for Pay As You Earn (PAYE) to operate.

Earnings paid in foreign currency

Convert any earnings paid in foreign currency to the sterling equivalent at the rate of exchange on the date of payment.

Because earnings are usually calculated a few days before payment, 'date of payment' means the date you assess and prepare the various pay and tax documents.

When to pay

Usually there is liability for National Insurance contributions as soon as an employee starts work in Great Britain.

Exceptions

An exception is made if an employee:

  • does not normally live or work in Great Britain1 and
  • was sent to work in Great Britain1 temporarily by an employer outside the United Kingdom, even if their employer also has a place of business in Great Britain1.

In certain cases, there is no liability to pay National Insurance contributions until the employee has lived in Great Britain1 for a continuous period of 52 weeks.

The exceptions usually involve workers from EC, EEA or RA countries. If youlive (or were living ) in Northern Ireland) Great Britain1 is mentioned throughout. this leaflet.

How to pay

The way National Insurance contributions are paid depends on who is the employer while the employee works in Great Britain1.

British employer

Normal payment arrangements apply.

Overseas employer

If the employer has a place of business in Great Britain1, follow the procedures in leaflet CWG2 Employer's Further Guide to PAYE and NICs.

Follow the arrangements in leaflet CA65 National Insurance contributions for people working for embassies, consulates and overseas employers, if:

  • the employee is the employer's only agent in Great Britain1 and
  • the only liability is for an employee's primary National Insurance contribution.

 

Agent in Great Britain1 will pay National Insurance contributions

The employer may have an agent in Great Britain1 who will pay the National Insurance contributions. For example if the employee is 'attached' or 'seconded' to a British associate.

If both the employee's primary and employer's secondary National Insurance contributions are payable, see leaflet CWG2 Employer's Further Guide to PAYE and NICs.

If the only liability is for the employee's primary National Insurance contributions, amend the action in leaflet CWG2 Employer's Further Guide to PAYE and NICs as follows:

  • enter the amount of the employee's National Insurance contributions in both columns (a) and (b) of the End of Year Return (EYR) and
  • at the end of the tax year, take the following actions:
  1. separate the employee's EYR from that on which you recorded both the employer's and the employee's National Insurance contributions
  2. prepare a separate P35 for these employees. You can get this from the Collector of Taxes and
  3. note column 1 on the back of the P35 with 'Employee's contributions only'.

Useful contacts

International Services

International Services gives access to a wide range of information about United Kingdom National Insurance-related issues for employers of people who are:

  • outside the United Kingdom or
  • about to leave the United Kingdom.

Phone: 0845 9154811.
Fax: 0845 9157800.

Calls from outside the UK

Local call rates are not available.

Dial the international code followed by:

Phone: 44 191 225 4811.
Fax: 44 191 225 7800.

or you can write to:

Inland Revenue
National Insurance Contributions Office
Room A2301
International Services
Longbenton
Newcastle upon Tyne
NE98 1ZZ

If you are in Northern Ireland, contact:

Inland Revenue
(National Insurance Contributions) office
International Services
24-42 Corporation Street
Belfast
BT1 3DP

Phone: 028 90543289
Fax: 028 90543354

Further Information

If you are unhappy with our service

Leaflet IR120 You and the Inland Revenue gives details of our complaint procedures. You can get this leaflet from any Social Security office, Inland Revenue Enquiry Centre, Citizens Advice Bureau and main libraries.

Data Protection

The Inland Revenue is a Data Controller under the Data Protection Act. We hold information for the purposes specified in our notification made to the Data Protection Commissioner, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do it will only be as the law permits, to check accuracy of information, prevent or detect crime, protect public funds.

We may check information we receive about you with what is already in our records. This can include information provided by you as well as by others such as other government departments and agencies and overseas tax authorities. We will not give information about you to anyone outside the Inland Revenue unless the law permits us to do so.

 

 

This leaflet gives general guidance only and should not be treated as a complete and authoritative statement of the law.
September 1999.
Prepared by Inland Revenue National Insurance Contributions Office, Publications, Newcastle upon Tyne.

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