Employees working abroad
PAYE if your employees work abroad, including applying for exemption in the other country.
We have temporarily changed how you calculate National Insurance contributions for employees who temporarily return to work in the UK during coronavirus.
This guidance will be updated when this change ends.
Introduction to PAYE for employees working abroad
How you calculate and pay PAYE 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 tax
You must continue to calculate and deduct PAYE 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 tax as usual for these employees - but there are exceptions.
How to calculate National Insurance contributions
The rules for National Insurance contributions depends on your employee’s circumstances and which country your employee is going to work in.
Employee working in the EU, Iceland, Liechtenstein, Norway or Switzerland
National Insurance for workers from the UK working in the EU, Iceland, Liechtenstein, Norway, or Switzerland explains what to do if your employee goes to work in one or more countries in the EU, Iceland, Liechtenstein, Norway or Switzerland and when UK National Insurance contributions are payable.
Employee working in a country outside of the EU, Iceland, Liechtenstein, Norway and Switzerland that the UK has a social security agreement with
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
- Isle of Man
- Israel
- Jamaica
- Japan
- Jersey
- Mauritius
- New Zealand
- Philippines
- Republics of former Yugoslavia (the Republics of Bosnia-Herzegovina, North Macedonia, Serbia, Montenegro and Kosovo)
- Republic of Korea (South Korea)
- Turkey
- USA
Workers temporarily posted by their UK employer to one of these countries may be able to continue paying contributions to the UK instead of to the country you post them to.
As the agreement with New Zealand only covers social security benefits, for National Insurance contributions we consider New Zealand a non-social security agreement country.
If your employee works in one of the countries the UK has a social security agreement with, apply to HMRC for a certificate of continuing liability for the employee so they can carry on paying UK National Insurance contributions.
If HMRC works out UK National Insurance contributions are payable, the certificate of continuing liability is evidence that no social security contributions are due in the other country. For employees working in any of the countries listed use form CA9107. Complete for each employee going to work abroad in a country the UK has a social security agreement with.
Employees going to work in any other country
You and your employee will carry on paying National Insurance 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.
Temporary changes during coronavirus
Employees working in the EEA and Switzerland - temporarily returning to work in the UK due to coronavirus
For those working in a country that the UK has a reciprocal social security agreement with, you can contact HMRC with any concerns, or the authorities in the country where the work is being undertaken.
Employees working in a country outside the EEA and Switzerland with which the UK has a social security agreement - temporarily returning to work in the UK due to coronavirus
For those working in a country that the UK has a reciprocal social security agreement with, you can contact HMRC with any concerns, or the authorities in the country where the work is being undertaken.
Employees working in a country outside of the EEA and Switzerland with which the UK doesn’t have a social security agreement - temporarily returning to work in the UK due to coronavirus
Due to coronavirus HMRC have agreed to allow an easement for employees temporarily returning to work in the UK from a country with which the UK does not have a reciprocal agreement on social security.
Where an employee returns to the UK on temporary duty, the situation will depend on the nature of the duties.
If the duties are incidental to overseas employment such as a briefing or further training for that employment, then treat the employee as still abroad. You should continue to deduct Class 1 contributions until the 52 week period of Class 1 liability is met.
If the duties are not incidental to overseas employment and the 52 week period of liability has ended, you can:
- disregard the first 6 weeks of employment in the UK (this is not a legal requirement but a concession to ease administration when an employee briefly returns to the UK - it only applies where they return to the UK for the same employer)
- pay contributions in the normal way for any further period in the UK
Where the 52 week period has not ended, it is not extended by any period of employment in the UK which falls within it.
If the employee goes to work abroad again once it is safe to do so and any existing liability period has ended, Class 1 National Insurance contributions will continue to be paid for 52 weeks starting from the contribution week in which the overseas employment begins.
A further period of liability will arise only if:
- the employer has a place of business in UK
- the employee is ordinarily resident in UK and
- immediately before the start of the employment the employee was resident in UK
Modified PAYE procedures
If you have an agreement with HMRC to operate an EP Appendix 7B scheme to pay National Insurance contributions on estimated amounts of income during the year, you must include the National Insurance contributions on the estimated pay on the Full Payment Summary for the payroll under which you have the NT tax code for the employees.
You must establish the correct amount of National Insurance contributions due and submit a completed form National Insurance contributions Settlement Return no later than 31 March following the end of the tax year concerned.
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.
Last updated 31 December 2020 + show all updates
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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.