Usually, the normal PAYE (Pay As You Earn) tax and National Insurance contributions (NICs) rules and procedures apply to employees who come to the UK from abroad, but there are circumstances in which exceptions apply. This guide explains what these circumstances are, and what you need to do if they apply to your business.
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This guide tells you the PAYE tax and NICs procedures you must follow when employing someone who has come to the UK from abroad. However, before considering these procedures it is important that you first make sure that everyone you employ is entitled to work in the UK.
Ensure your workers are eligible to work in the UK on the Business Link website (Opens new window)
Preventing illegal working on the UK Border Agency website (Opens new window)
For almost all businesses the rule is simple - PAYE tax and NICs deductions should be calculated and recorded in the same way as you would for any other employee.
How to record employee payments and deductions on form P11
Taking on a new employee - employee doesn't have a form P45
Where your employee has been seconded to work in the UK there is a different form to use to notify HMRC they have started with you - form P46(Expat).
It is only used for the following types of employees:
In all other circumstances where an employee comes from abroad you should use the normal P46 procedures.
You can use form P46(Expat) to collect the information you need from your employee but you must send the details to HMRC online.
Check the table below to see which tax code to use for your employee.
| Statement declared by your employee | Tax code to use |
|---|---|
| A - I intend to live in the UK for more than six months | 747L cumulative |
| B - I intend to live in the UK for less than six months | 747L week 1/month 1 (unless employee is a EEA citizen - see note below) |
| C - I will be working for the employer both inside and outside the UK, but will be living abroad | 747L week 1/month 1 (unless employee is a EEA citizen - see note below) |
| European Economic Area citizen - where the employee enters 'X' in this box | 747L cumulative You must use the emergency tax code on a cumulative basis, even if the employee has completed statements B or C. |
| None - your employee did not give you the information before their first payday | 0T week 1/month 1 |
| D - UK Student Loan | Start making student loan deductions from the next payday. |
In the following circumstances different PAYE tax procedures apply.
If your employee isn't resident or ordinarily resident in the UK, and if they work both in the UK and overseas, we may issue a direction informing you how much of your payments to them should be subject to PAYE tax in the UK.
This kind of situation can arise when it's unclear how much of a payment to the employee relates to duties carried out in the UK and how much relates to duties carried out abroad.
You can ask HMRC to issue a direction of this kind, but until you receive it, you must calculate and deduct PAYE tax using the total amount that you pay to your employee.
More about what 'resident' and 'ordinarily resident' mean (PDF 739K)
If your employee is only in the UK for business and spends less than 183 days here in a tax year, special PAYE tax rules may apply.
If you think that this affects your business, contact HMRC's Employer Helpline.
HMRC also have a New Employer Helpline which specialises in advising employers with less than three years' experience.
Find contact details for HMRC's Employer Helpline
Find contact details for HMRC's New Employer Helpline
More about NICs for employees coming to the UK from abroad
If an individual who is employed by a company outside the UK is sent to work in your business, you must act as their 'host employer' and deduct NICs in the normal way.
However, if you are a 'host employer' and any of the conditions explained in the following sub-sections apply to your business, then there are different procedures you must follow.
If you need further help in relation to any of these, contact HMRC's Employer Helpline.
You can also read our more detailed guidance on NICs for employees from abroad.
More about NICs for employees coming to the UK
If an employee is sent to work in your business by their employer in a country in the European Economic Area (EEA), and they have a valid form E101 issued by that country, then they are exempt from paying NICs in the UK. They will continue to pay NICs in their home country for the period specified on their E101.
There is a list of EEA countries at the end of this guide.
If an employee is sent by their employer from one of these countries to work temporarily in your business, and they have a certificate from their home country, then they are exempt from paying NICs in the UK for the duration of their certificate.
There is a list of Reciprocal Agreement and Double Contribution Convention countries at the end of the guide.
If an employee is sent by their normal employer from one of these countries to work in your business, and if all of the following conditions apply, then no NICs are due for the first 52 weeks after the employee arrives in the UK:
Once the period of 52 weeks finishes, you should begin deducting NICs from these employees in the normal way.
In almost all cases you must calculate, record and deduct NICs in the normal way for students who come to the UK to work for you.
However, NICs are not payable for the first 52 weeks (starting from the first Sunday after they arrive in the UK) if all the following conditions apply:
When the 52 week exemption finishes, the normal rules about working out, paying and recording NICs apply.
In almost all cases you must calculate, record and deduct NICs in the normal way for apprentices who come to the UK to work for you.
However, NICs are not payable for the first 52 weeks (starting from the first Sunday after they arrive in the UK) if all the following conditions apply:
When the 52 week exemption finishes, the normal rules about working out, paying and recording NICs apply.
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 and Switzerland.
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). There is also an agreement with the Isle of Man.
The countries with which the UK has a double contributions convention covering NICs are: Canada, Republic of Korea and Japan.
