National Insurance Contributions Office - Agreement Between the UK and Japan on Social Security

You may be interested to know about the Agreement between the UK and Japan on Social Security.

Following discussions between officials of the UK and Japan, the Agreement came into force on 1 February 2001. Entry into force was announced in a Press Release.

The main purpose of the Agreement is to ensure that a person is not liable to pay social security contributions for pension purposes to both countries' schemes at the same time. The parties to the Agreement are the United Kingdom of Great Britain and Northern Ireland, the Isle of Man, Jersey, Guernsey (including Alderney, Herm & Jethou) and Japan. The Agreement does not cover benefits.

The Agreement prevents a dual insurance liability for pension purposes. The employee will either be subject to the UK NI scheme or to the Japanese pensions system. The Agreement also covers the self-employed (including self-employed detached workers, persons who are self-employed in both countries or self-employed in one country and employed in the other), as well as persons working on board ships, and civil servants or people in similar employment.

The following gives an outline of the main provisions of the Agreement for workers going to Japan. Similar rules will operate in respect of workers coming to the UK.

Detached workers - Employees

An employee who is insured under UK legislation and is sent to work in Japan by an employer with a place of business in the UK, will continue to pay Class 1 NI contributions, provided the detachment is expected at the outset to last for no more than five years. This will also apply when the employer sends an employee to work in Japan from a third country. The employee will not be required to contribute to the Japanese pension system.

The employer should apply, on behalf of the employee, to HMRC Residency (Newcastle) for a certificate of continuing liability confirming that the employee remains subject to UK legislation for the period of their detachment to Japan.

A detachment of more than five years at the outset will mean that Japanese social security legislation will apply. UK Class 1 NI contributions will not be payable.

A Japanese worker detached to the UK for more than five years at the outset will be subject to UK social security legislation as though they were ordinarily resident in the UK. This means that UK Class 1 NI contributions are due from the outset of the employment. Regulation 145(2) of Social Security (Contributions) 2001 will not apply.

Detached worker - Self-employed

A self-employed person who goes to work only in Japan and, who ordinarily works on a self employed basis in the UK and is insured under UK legislation, will continue to pay UK Class 2 (and possibly Class 4) NI contributions, provided the detachment is expected at the outset to last for not more than five years. The self-employed person will not be required to contribute to the Japanese pension system.

The self-employed person should apply, to HMRC Residency (Newcastle) for a certificate of continuing liability confirming that they remain subject to UK legislation for the period of their detachment to Japan.

A detachment of more than five years at the outset will mean that Japanese social security legislation will apply and no UK NI contributions will be due.

A self-employed person from Japan working only in the UK for more than five years at the outset will be subject to UK social security legislation as though they were ordinarily resident in the UK.

Employed in the UK and Japan for the same period

A person who is employed in the UK and Japan for the same period and is ordinarily resident in the UK will remain subject to UK social security legislation and liable for Class 1 NI contributions. There will be no liability for contributions to the Japanese pension system. The UK employer should apply to HMRC Residency (Newcastle) for a certificate confirming that they remain subject to UK legislation.

Self-employed in both the UK and Japan

A person who is self-employed in both the UK and Japan for the same period and ordinarily resident in the UK will remain subject to UK social security legislation and liable for Class 2 (and possibly Class 4) NI contributions. There will be no liability for contributions to the Japanese pension system. The person should apply to HMRC Residency (Newcastle) for a certificate confirming that they remain subject to UK legislation.

Employed in the UK and self-employed in Japan for the same period

A person employed and ordinarily resident in the UK and self-employed in Japan for the same period, will remain subject to UK social security legislation and Class 1 NI contributions will be payable. There will be no additional UK NI contributions liability from any remuneration paid in respect of self-employment in Japan. Nor will there be any liability for contributions to the Japanese pension system. The person should apply to HMRC Residency (Newcastle) for a certificate confirming that they remain subject to UK legislation.

Working on board sea going vessels

A person employed on board a sea going vessel registered in either the UK or Japan who, but for the provisions of this Agreement, would be subject to the legislation of both the UK and Japan, shall be subject only to the social security legislation of the country in whose territory he is ordinarily resident.

Civil servants and similar employees

The DCA will not apply to persons in Government Service who are covered by the Vienna Convention on Diplomatic Relations of 18 April 1961, or the Vienna Convention on Consular Relations of 24 April 1963.

Civil servants and persons treated as such who are sent to work in the other country will remain subject only to the social security legislation of their home country.

Modification Provisions

In particular circumstances HMRC Residency (Newcastle) may seek agreement from the Japanese authorities to modify any of the insurability provisions in the Agreement. For example, where a detached worker's employment in Japan, owing to unforeseen circumstances, unexpectedly lasts longer than the five year detachment, it may be possible to get agreement from the Japanese authorities to allow the continuation of UK Class 1 NI contributions, instead of contributing to the Japanese pension scheme. Any such request should be made before the end of the original detachment period and in no case shall the aggregate of the expected period and any further period exceed eight years.

The modification provisions also apply to self-employed persons and it is of course open to the Japanese authorities to seek any similar agreement from HMRC Residency (Newcastle) for their detached workers in the UK.

Additional Information

An appendix covering frequently asked questions is attached to this note but if you need any further information or would like to order a leaflet please contact the HMRC Residency (Newcastle) Helpline at the following number:

0845 9154811 (if phoning from the UK) or
0044 191 2037010 (if phoning from abroad)

Frequently Asked Questions

  1. Will detached workers who have been sent to the UK from Japan and who remain insured in the Japanese Pension scheme have to obtain a United Kingdom National Insurance number?

    No. If UK National Insurance contributions are not payable it is not necessary to register for a National Insurance number. If however UK income tax is due the tax office will allocate a tax reference number for each worker affected.

  2. Does the Agreement only apply to nationals of the UK and Japan?

    No. The Agreement covers all nationalities.

  3. As the Agreement, in relation to Japan, only refers to Japanese pension systems does this mean that workers in Japan who hold UK certificates of continuing liability may be required to pay contributions in Japan for benefits other than pensions?

    Possibly, yes - insurance for health, long-term care, employment, and workers' accident compensation insurance. The latter is the responsibility of the employer in Japan. For further information write to the Japanese authorities at the following address:

    4. Office for International Relations
    Planning Division
    Administration Department
    1-2-2
    Kasumigaseki
    Chiyoda-ku
    Tokyo 100-8045

    Fax number 03-3502-2368

  4. In the event of a company changing its name or a company merger will it be necessary for certificates of continuing liability to be amended or replaced to reflect the new name?

    Possibly, yes. But this will depend on the circumstances. The company should check the position with either HMRC Residency (Newcastle) or the Social Insurance Agency in Japan.

  5. Can Japanese detached workers in the UK who have paid UK contributions prior to 1 February 2001 and who will pay Japanese contributions from that date under the transitional arrangements, pay voluntary contributions for UK pension purposes?

    No, not whilst in the UK unless they are over age 60. But, they can pay UK voluntary contributions on their return to Japan provided the normal conditions for payment are satisfied.

  6. Do certificates of continuing liability held by detached workers coming to the UK need to be registered with HMRC?

    No. It is not necessary to produce the certificate to any HMRC office for registration. On arrival the worker should simply retain the certificate and produce for inspection either to the payroll operator of the company where they are based or to an HMRC Compliance Inspector .

  7. Where do I obtain advice about the assessment or collection of UK NI contributions for workers in the UK who are affected by the transitional arrangements and who will no longer be required to pay UK NI contributions from the date the Agreement comes into effect?

    Contact your nearest HMRC office for advice.