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 if you think these rules may apply to your business you should contact HM Revenue & Customs (HMRC) for more advice.
On this page:
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:
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, HMRC 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 HMRC office and the overseas authority to ensure that you are clear about your obligations in both countries.
You should contact HMRC’s Employer Helpline (you’ll find a link to their contact details at the end of this guide) 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.
The rules for NICs depend on which country your employee is going to work in.
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 in the next section of this guide.
However, if the employee's work abroad is expected to last less than 24 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 to HMRC for a certificate A1 for the employee, using:
Go to form CA3821 - first time application
Go to form CA3822 - if you've applied before
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 in the next section 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 to show to the tax authorities in the other country. You can get this certificate from HMRC’s Residency Helpline.
Find contact details for HMRC's Residency Helpline
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.
More about NICs for employees going to work abroad
The countries in the EEA 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 and the 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 Double Contributions Convention covering NICs are: Canada, Republic of Korea and Japan.
More about NICs for employees going to work abroad
For help and advice on PAYE tax issues contact HMRC's Employer Helpline.
Find contact details for the Employer Helpline
For enquiries relating to NICs, contact HMRC's Residency Helpline.
