Employee going to work abroad
The rules in this area are complicated. This guide provides an overview of the main procedures for PAYE (Pay As You Earn) tax and National Insurance contributions (NICs). But you should contact us for more advice if you think these rules may apply to your business.
For PAYE tax issues contact our Employer Helpline on Tel 08457 143 143 - it is open 8.00 am to 8.00 pm, Monday to Friday and 8.00 am to 5.00 pm on Saturday and Sunday.
For NICs issues contact our Residency department in Newcastle on Tel 0845 915 4811 (from outside the UK the number to dial is Tel +44 191 203 7010). This helpline is open 8.00 am to 5.00 pm, Monday to Friday. It is closed at weekends and on bank holidays.
How to calculate PAYE tax for employees working abroad
The basic rule is that you must continue to calculate and deduct PAYE tax in the normal way from all your payments to any of your employees who work abroad.
When your employee goes abroad, you'll need to give them a letter including the following details:
- the date they went abroad to work
- their gross pay from the start of the tax year to the date when they were sent abroad
- the tax deducted from the start of the tax year to the date when they were sent abroad
Note that employees who spend most of their time abroad over a period of a year or more may be able to obtain full UK tax relief on their earnings. If this is the case, we will allow you to use special PAYE arrangements.
If your employee is on an overseas contract, it is possible that the tax authorities in the overseas country will seek to make tax deductions from your employee's income. You should contact both your HM Revenue & Customs office and the overseas authority to ensure that you are clear about your obligations in both countries.
Employees working in offshore areas
You should contact us if one of your employees is going to be working in an offshore area. In general, employers must continue to operate PAYE tax as usual in these circumstances, but there are exceptions.
How to calculate NICs for employees who work abroad
The rules for NICs depend on which country your employee is going to work in.
NICs for an employee working in another EEA country
If one of your employees goes to work for you in another country of the European Economic Area (EEA), the general rule is that their National Insurance contributions will be paid only in that other country. You can find a list of EEA countries at the bottom of this guide.
However, if the employee's work abroad is expected to last less than 12 months, you should apply for their contributions to continue to be paid in the UK rather than the other country. To do this, you will need to apply for a certificate E101 for the employee from us:
- apply using form CA3821 if it is your first time applying
- use form CA3822 if you have applied before
If the employee's work abroad unexpectedly lasts beyond 12 months, you may be able to extend the period for which UK NICs continue by up to a further 12 months. To do this, you will need to contact us and ask for a certificate E102.
Download form CA3821 (PDF 149K)
Download form CA3822 (PDF 160K)
NICs for a non-EEA country that has a relevant agreement with the UK
These are countries with which the UK has signed either a Reciprocal Agreement or a Double Contributions Convention. (There is a list of these countries at the end of this guide.)
For these countries, in general the employee only has to pay NICs in the country they go to work in.
Special rules apply to workers who are sent to work there for a limited time (the maximum posting periods are different in each country). These special rules mean the employee continues to pay NICs here in the UK, and is exempt in the other country.
Before your employee goes abroad you will need to obtain a certificate from our Residency department in Newcastle, which you can contact on Tel 0845 915 4811 (from outside the UK: Tel +44 191 203 7010). This certificate is to show to the tax authorities in the other country.
NICs for non-EEA countries that do not have a relevant agreement with the UK
If the country your employee is going to work in isn't an EEA country and doesn't have a Reciprocal Agreement or a Double Contributions Convention with the UK, then you must continue calculating and deducting NICs in the UK for the first 52 weeks they are abroad.
EEA, Reciprocal Agreement or a Double Contributions Convention countries
The countries in the European Economic Area are: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Republic of Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK.
The countries with which the UK has a reciprocal agreement covering NICs are: Barbados, Bermuda, Guernsey, Israel, Jamaica, Jersey, Mauritius, Philippines, Turkey, USA, Federal Republic of Yugoslavia (including Serbia and Montenegro, Bosnia-Herzegovina, Croatia, Slovenia and the former Yugoslav Republic of Macedonia).
The countries with which the UK has a ouble Contributions Convention covering NICs are: Canada, Republic of Korea and Japan.
