Employees working abroad
PAYE Income Tax and National Insurance contributions if your employees work abroad, including applying for exemption in the other country.
Introduction to PAYE for employees working abroad
How you calculate and pay PAYE Income Tax and National Insurance contributions for employees who work abroad depends on where they’re working and how long you expect them to be working there.
This guidance tells you what you need to do about PAYE if your employees are working abroad.
How to calculate PAYE Income Tax
You must continue to calculate and deduct PAYE Income Tax from all payments made to employees who work abroad.
When your employee goes abroad, give them a letter stating:
- the date they went abroad to work
- their gross pay from the start of the tax year to the date they went abroad
- the tax deducted from the start of the tax year to the date they went abroad
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. Ask your employee to complete form P85 and send it to HMRC who will confirm the tax code to use.
If your employee is on an overseas contract, it’s possible that the tax authorities in the overseas country will want to make tax deductions from your employee’s income. Contact the Employer Helpline and the overseas authority to make sure you’re clear about your obligations in both countries.
You must tell the Employer Helpline if one of your employees is going to be working in an offshore area. Usually, you’ll continue to operate PAYE Income Tax as usual for these employees - but there are exceptions.
How to calculate PAYE National Insurance contributions
You must calculate and deduct PAYE National Insurance contributions from any payments of earnings your employee earned while in the UK. This also applies to earnings paid while your employee is abroad.
Employee working in the EU, Gibraltar, Iceland, Liechtenstein, Norway or Switzerland
If your employee works in one of these countries, they will usually pay social security contributions in that country instead of UK National Insurance contributions.
However, if they have a certificate of coverage (also referred to as a PDA1), confirming that they only need to pay UK National Insurance contributions, you must calculate and deduct PAYE National Insurance contributions on their earnings as if the work had been done in the UK.
For example, if your employee goes to work abroad temporarily for up to 2 years, they will usually qualify for a certificate of coverage and continue to pay UK National Insurance contributions.
Your liability to pay social security contributions depends on your employee’s liability.
You can find more information on what to do if your employee goes to work in one of these countires in Paying National Insurance if you’re going to work in the EU, Gibraltar, Iceland, Liechtenstein, Norway or Switzerland.
Employee working in another country with which the UK has a social security agreement
If your employee works in a country that the UK has a social security agreement with, sometimes called reciprocal agreements or double contribution conventions, they’ll usually pay social security contributions in that country rather than UK National Insurance contributions.
The countries are:
- Barbados
- Bermuda
- Canada
- Chile
- Croatia
- Guernsey
- India
- Isle of Man
- Israel
- Jamaica
- Japan
- Jersey
- Mauritius
- Philippines
- Republics of former Yugoslavia (the Republics of Bosnia-Herzegovina, North Macedonia, Serbia, Montenegro and Kosovo)
- Republic of Korea (South Korea)
- Turkey
- USA
If you send your employee to work temporarily in one of these countries, they may be able to continue paying contributions to the UK instead of to the country you send them to. If so, you must calculate and deduct PAYE National Insurance contributions on their earnings as if the work had been done in the UK.
Your liability to pay social security contributions depends on your employee’s liability.
The certificate of coverage is evidence that no social security contributions are due in the other country. For employees who will be working in any of the countries listed in this section use form CA9107 to apply for the certificate.
Employees going to work in any other country
You must continue to calculate and deduct PAYE National Insurance contributions from all payments made to employees who work abroad for the first 52 weeks they’re abroad if all the following conditions are met:
- you have a place of business in the UK
- your employee is ordinarily resident in the UK
- your employee was living in the UK immediately before starting work abroad
You will need to check with the social security institution in the country that you are going to work in to see whether you need to pay social security contributions there.
Operating separate payrolls
You must complete the starter and leaver information when an employee moves between PAYE schemes, if you have 2 different payrolls for domestic and overseas employers.
Updates to this page
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The 'How to calculate PAYE National Insurance contributions' section has been updated with clearer information on calculating and deducting National Insurance for employees working abroad. The list of social security agreement countries has been updated to add India and remove New Zealand. The temporary coronavirus changes have been removed as they no longer apply.
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This page has been updated because the Brexit transition period has ended.
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Due to coronavirus (COVID-19) a temporary easement has been introduced for employees who temporarily return to work in the UK from a country outside the EU, EEA or Switzerland, where the UK does not have a reciprocal agreement.
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The bilateral Social Security agreement with Chile began on 1 June 2015.This guide has been updated to include Chile in the list of non-EEA countries that have an agreement with the UK.
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First published.