NIM33665 - Inbound Employee

Sections 1 – 3 and 6 of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992)

Where an employed earner is paid earnings in the UK for work carried out wholly or partially outside the UK, a NICs liability only arises on any earnings earned whilst the employed earner is resident, present or ordinarily resident in the UK at the time of the employment.

Different rules may apply if an employee is covered under:

A Social Security Agreement see NIM33670

Regulation 145)(2) SSCR 2001 see NIM33675

Example 1

Stevie lived and worked in South Africa, a country with which the UK does not have a social security agreement, before permanently moving to the UK on 1 October 2023 to continue working for the same UK based employer. Stevie does not meet the criteria in Regulation 145(2) SSCR 2001 and for that reason became immediately subject to UK social security legislation when he moved to the UK. In March 2024 Stevie was paid a bonus of £30,000 for his employment covering a 12-month period from 1 February 2023 to 31 January 2024. During this period Stevie worked 8 months in South Africa and 4 months in the UK.

Stevie was an employed earner in the UK at the time the bonus was paid, however, the bonus was earned partially outside the UK when Stevie was not subject to UK social security legislation or any social security agreement. As Stevie only satisfied the required criteria for liability to Class 1 NICs for 4 out of the 12 months, Stevie is only liable to pay Class 1 NICS on 4/12 (£10,000) of the bonus.

£30,000 (Bonus payment)

4/12 of £30,000 = £10,000

Stevie is liable to pay Class 1 NICs on £10,000

Example 2

Jim lived and worked in Australia, a country with which the UK does not have a social security agreement, for an Australian employer. In December 2023 Jim relocated permanently to the UK and became ordinarily resident in the UK and continued to work for the same employer in the UK. In February 2024 Jim received a bonus payment of £2,000 for work completed in November 2023, whilst Jim was working in Australia for the Australian employer.

Jim did not satisfy the Class 1 NICs criteria at the time that the bonus was earned. Jim was not an employed earner resident, present or ordinarily resident in the UK at the time the bonus was earnt, therefore there is no NICs liability on the bonus payment.

Example 3

Elaine is ordinarily resident in the UK and has worked for a UK employer in Dubai, a country with which the UK does not have a social security agreement, for 5 years. Elaine is paid on the last day of every month. On 25 October 2023, Elaine returns to work in the UK for the same employer.

Elaine is subject to UK social security legislation from her first day of employment in the UK, 25 October 2023. As Elaine is paid on a monthly basis, in her October salary she will only be liable to UK NICs on any earnings from 25 October to 31 October 2023.