NIM33670 - Inbound Employee in scope of a Social Security Agreement (SSA)
Sections 1 – 3 and 6 of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992)
Where an employed earner is paid earnings for work carried out wholly or partially outside the UK, a NICs liability only arises on any earnings earned whilst resident, present or ordinarily resident in the UK at the time of the employment.
Where the employed earner, at the time of the employment in the UK, is in scope of another country’s social security legislation as a result of the provisions in a SSA, then the employee will not be subject to UK social security legislation (see NIM33020 or NIM33400).
This means that although the employee may be considered an employed earner resident or present in the UK they have no liability to pay Class 1 NICs from the day they start work in the UK as they are not subject to UK social security legislation. Any liability to Class 1 NICs will only arise when they are no longer covered by the provisions in the SSA.
Example 1
Suzy was living and working in France for a French employer and was sent to work in the UK for two years. During this time, Suzy remained subject to French legislation and was liable to pay French social security contributions under an SSA for which she held a certificate from the French authorities to prove this. After the 2 years Suzy started a new employment with a UK employer and is subject to UK social security legislation and liable to pay Class 1 NICs. Suzy is paid a bonus of £10,000 by the French employer for the work carried out in the UK whilst subject to French social security legislation.
The bonus relates to a period of employment when Suzy was subject to French legislation under an SSA and for that reason Suzy is not liable to pay Class 1 NICs on the bonus.