NIM33685 - Outbound Employee in scope of Regulation 146 or a Social Security Agreement (SSA)

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

Regulation 146 of the Social Security Contributions Regulations 2001 (SSCR)

 

Where an employee is working abroad and is in scope of either regulation 146 of SSCR, see NIM33530, or an SSA, see NIM33020 or NIM33400, then the employee may remain subject to UK social security legislation for all or part of their work abroad. For any period they remain subject to UK social security legislation they are treated as an employed earner in the UK at the time of the employment even though the employment is abroad.

Example 1

Leigh is ordinarily resident in the UK and works for a UK employer and is paid monthly on the last working day of the month. The employer sends Leigh to work in Brazil, a country with which the UK does not have a social security agreement, for 18 months from 13 September 2023. As Leigh is in scope of Reg 146 SSCR they remain liable to pay Class 1 NICs for the first 52 weeks of employment in Brazil.

The 52 weeks begin at the start of the contribution week when they go to Brazil, 10 September 2023, ending on 7 September 2024.

When Leigh is paid on 30 September 2024 Leigh is liable to pay NICs on the earnings between 1 and 7 September 2024.  

Example 2

Raj is ordinarily resident in the UK and works in the UK for a UK employer. On 10 October 2023, his employer sends him to work in the USA for 8 months. Under the terms of the UK-USA SSA, Raj remains subject to UK social security legislation as he is considered a detached worker. After the 8 months are completed on 10 June 2024, Raj’s circumstances change and he becomes permanently   employed in the USA so can no longer be considered a detached worker and becomes subject to USA social security legislation from 10 June 2024.

On 1 January 2025 Raj is awarded an annual bonus of £60,000 for work completed between 10 October 2023 and 9 October 2024. At the time of payment Raj is subject to USA social security legislation, however as Raj was subject to UK social security legislation for 8 months of the period the bonus was earned, £40,000 of the bonus is subject to Class 1 NICs.

£60,000 (bonus) x 8(months UK)/12(months earned) = £40,000

Example 3

Donald was working in the UK for a UK employer and was sent by this employer to work in China, a country with which the UK does not have a social security agreement, for 2 years starting 10 January 2023. Donald is paid a bonus of £40,000 in March 2025 for the work in China.

Donald was liable to pay NICs for the first 52 weeks whilst working in China because Donald was subject to UK social security legislation under regulation 146 of SSCR. As he started in China on 10 January 2023, he remains liable to pay NICs until 14 January 2024, the end of the 52nd week. Therefore, Donald remains liable to pay Class 1 NICs on the bonus which covered the period 10 January 2023 to 14 January 2024.