This page looks at some common issues for employers of employees coming to the UK from overseas.
More detailed guidance for employers is available in leaflet 'CWG2 Employer's Further Guide to PAYE and NICs'.
Liability for Class 1 National Insurance contributions occurs if a person works:
There are also special rules for people in particular jobs and for people who have to work overseas.
National Insurance contribution typesClass 1 National Insurance contributions are made up of two parts:
| National Insurance contribution | Paid by |
|---|---|
| Primary | Employee |
| Secondary | Employer |
Generally, an employer of a person working abroad only has to pay Class 1 secondary National Insurance contributions if they:
However, from 1 May 2010, an employer in another European Union (EU) Member State, with employees in the UK's National Insurance system is treated as having a place of business and registered in the UK for National Insurance purposes and has to pay secondary National Insurance and deduct contributions from the employees.
However, employers who do not have to pay can volunteer to pay the secondary National Insurance contributions if they wish.
'Host' employerIf there is no employer in the UK (or from 1 May 2010 in another EU Member State), and that foreign employer makes the employee available for the purposes of a UK 'host' business in the UK, then that UK 'host' employer is treated as the secondary contributor for National Insurance purposes.
For there to be a 'host' employer' it is not necessary that the contract of employment is between the employee and that host, merely that the overseas company makes the employee available for the purposes of the UK business.
Typically, this happens within groups of companies, where an employee of a company outside the UK is seconded to a company in the UK. However, it can also occur where a foreign company sends their employee to carry out work for a client, or other business in the UK.
Overseas employer/Employment agencyWhere the contractual employer is overseas and the employee is supplied through an employment agency in the UK, the employment agency in the UK will be the secondary contributor.
Where the employee is supplied by an employment agency outside the UK, the client company in the UK will be the secondary contributor.
Usually there is liability to pay National Insurance contributions as soon as an employee starts work in the UK.
ExceptionsSpecial rules apply if the employee comes from:
The basic rule is that if an employee comes from an EU/EEA Member State, Switzerland or a country with which the UK has a Reciprocal Agreement on Social Security or Double Contributions Convention , you must operate Class 1 National Insurance from the outset of the employment as you would for your normal UK resident employees, unless the employee has:
If the employee is not from an EU/EEA Member State, Switzerland or a country with which the UK has a Reciprocal Agreement on Social Security or a Double Contributions Convention.
National Insurance contributions are not payable for the first 52 weeks starting from the first Sunday after the employee arrives in the UK for an employee:
For more information see National Insurance for people coming to the UK.
If liability for Class 1 National Insurance contributions exists, work out the earnings-related National Insurance contributions on the gross earnings in the employment.
It makes no difference where or by whom, the employee is paid.
For example, if part of the earnings are paid outside the UK, or earnings go to dependants overseas, you must add these earnings to payments made in the UK.
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.
The way National Insurance contributions are paid depends on who is the employer while the employee works in the UK.
British employerNormal payment arrangements apply. Follow the procedures in leaflet 'CWG2 Employer's Further Guide to PAYE and NICs'.
Overseas employerIf the employer has a place of business in the UK, or is in the EEA and treated as having a place of business in the UK, follow the procedures in leaflet 'CWG2; Employer's Further Guide to PAYE and NIC's'.
Host employer or other UK business treated as the employerWhere the contractual employer is overseas and another business in the UK is treated as the employer, follow the procedures in leaflet 'CWG2 Employer's Further Guide to PAYE and NICs'.
Agent in the UK will pay National Insurance contributionsEmployers may have an agent in the UK who will pay the National Insurance contributions. 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:
