NIM33675 - Inbound Employee in scope of Regulation 145(2)

Regulation 145(2) of the Social Security Contributions Regulations (SSCR) 2001 SI 2001 No 1004

Regulation 145(2) of SSCR 2001 allows employed earners in the UK to be exempt from UK NICs for a period of up to 52 weeks if certain conditions are met, see NIM33515. If the employee is entitled to the exemption there would be no primary or secondary liability for the period the exemption applies even if the employee is paid for work in the UK. 

Example 1

Mick came to work in the UK for the first time on 1 January 2023 and is covered by the regulation 145(2) exemption for the first 52 weeks of the employment in the UK. Mick is awarded a cash bonus for work completed on 1 July 2023.

Mick is present in the UK when he receives the cash bonus, however, there is no Class 1 NICs liability on the payment because Mick is exempt from paying Class 1 NICs for the first 52 weeks he works in the UK when the work was completed.

Example 2

Derek comes to work in the UK on 1 April 2022, from Australia, a country with which the UK does not have a social security agreement, and is covered by the regulation 145(2) exemption. Derek remains in the same employment whilst working in the UK and returns to Australia on 31 March 2024. In August 2024 Derek is awarded a cash bonus of £3,000 for the period 1 April 2021 to 31 March 2024.

Derek was exempt from Class 1 NICs on the earnings he earned in the first 52 weeks he was working in the UK under Regulation 145(2) of SSCR 2001 and was liable to pay Class 1 NICs on earnings from 2 April 2023 to 31 March 2024. As the cash bonus includes the period that Derek was liable to pay Class 1 NICs, Derek would be liable to pay Class 1 NICs on the bonus earned from 1 April 2023 to 31 March 2024.

Example 3

Fiona comes to work temporarily in the UK from Brazil, a country with which the UK does not have a social security agreement from 8 March 2024. Fiona is paid monthly on the last day of each month.  Fiona meets the conditions of Reg 145(2) so she is exempt from paying Class 1 NICs for the first 52 weeks of her employment in the UK.

The 52 week exemption from paying NICs ends on Saturday 8 March 2025, Fiona is therefore liable to Class 1 NICs on earnings earned from week 53 onwards, which starts on Sunday 9 March 2025. 

In Fiona’s March pay she will be liable to NICs on all earnings earned from 9 to 31 March 2025 and on all earnings going forward until she leaves the UK.