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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1A National Insurance contributions: Special Class 1A NICs cases: Removal benefits and expenses: Employee relocates abroad

If there is continuing liability for UK NICs in respect of a person who relocates abroad, removal benefits and expenses chargeable to income tax under ITEPA 2003 (before 6 April 2003 – emoluments chargeable to income tax under Schedule), will be subject to Class 1A NICs if the conditions in NIM13021 are satisfied. You should bear in mind that employees who relocate abroad are unlikely to have earnings chargeable to income tax in the UK.

In the rare cases where employees relocate abroad who have earnings chargeable to income tax in the UK, the guidance set out in NIM16251 onwards applies equally to employees who relocate abroad and are provided with removal benefits and expenses.

Example

  • An employee accepts a secondment with their UK employer to work in the USA for no more than two years. She starts work in the USA on 1 March 2007. She earns £250,000 a year.
  • The terms of the secondment are such that the employee is given a certificate to show that she remains subject to UK Social Security legislation which includes provisions about NICs, see NIM33016.
  • The employee rented a property in the UK so she ends her tenancy agreement and rents a property in the USA. The employer reimburses the costs of ending the tenancy agreement and setting up an equivalent one in the USA.
  • The employee arranges for her belongings to be transported to the USA. The employer reimburses the costs of transportation.
  • The total amounts reimbursed by the employer amount to £9,000 and are all incurred within the limitation period (see EIM03104). The total consists of expenses to which the removal expenses tax exemption applies.

Commentary

The relocation benefits and expenses tax exemption applies to the first £8,000 of the reimbursed expenses.

The balance of £1,000 (£9,000 - £8,000) is general earnings chargeable to income tax, so section 10(1)(a) of the SSCBA 1992 is satisfied.

The employee is within the benefits code because she has general earnings chargeable to income tax, see NIM13070.

Paragraph 2 of Part 8 of Schedule to the SS(C)R 2001 is satisfied so the payments are disregarded from earnings so that Class 1 NICs are not due. Therefore, section 10(1)(c) is satisfied, see NIM13090.