special cases: international - people going to or coming from abroad: row: apportionment - method of computation
Method of computation
If the contract contains express provisions apportioning the earnings between work performed in the UK and work performed overseas for the overseas employer, use these as the basis for apportioning between UK and overseas employment.
In the absence of express provision in the contract of employment, the method to use is that in the Apportionment Act 1870. This provides that salary accrues on a daily basis over 365 days. This will not be the same as the income tax calculation for non-UK workdays.
Exclude 1 day’s worth of salary for each day working overseas in the foreign employer’s business.
Example 1 - Annual pay period
Mrs Patel is ordinarily resident in India and is sent to the UK by her employer to work in the UK at the offices of a UK company which is part of the group. She remains under contract to the Indian employer and the Indian employer bears the cost of the employment. Her salary is £100,000.
Her employer recalls her to India to advise on a hostile take-over for a period of 5 days - from 1 June until 5 June. The substantial part of 2 of those days is spent flying to India and back.
If Mrs Patel has an annual pay period, then the appropriate fraction can simply be applied to her annual salary:
|Gross Pay||£100, 000 X 5/ 365|
|Amount attributable to overseas workdays less||£1369.87|
|NICs is operated on the gross pay attributable to the UK||£98,630.13|
Example 2 - Monthly pay period
If Mrs Patel is monthly paid, the employer has to account for NICs each month as a payment is made. In June, no NICs are due on the salary paid in respect of the work in India.
The earnings on which NICs are to be calculated are those for the month of June - after an apportionment to take account of the 5 days which were not in respect of the employed earners employment.
|less 5/365 x 100,000 worth of salary|
|Amount attributable to non-UK workdays||£1369.87|
|NICs is operated on the monthly gross pay attributable to the UK||£6963.46|