HMRC internal manual

PAYE Manual

PAYE20100 - Employer records: set up employer record: DPNI scheme - direct payment (tax and NIC)

Commonly known as ‘PAYE Direct Payments procedures’.

A DPNI scheme is appropriate where liability for PAYE Income Tax and primary National Insurance Contributions (NIC) exist. The employee is responsible for setting up a DPNI scheme and pays both PAYE Income Tax and National Insurance (NI) to HMRC under the one PAYE reference.

The following criteria may apply

  • Certain types of employees or office holders, these include
  • Roman Catholic Priests
  • Clergy of the Church of Ireland
  • Officials whose earnings are made up mainly of fees paid by the public, for example, Registrars
  • Certain employees of foreign and Commonwealth governments, for example, a British chauffeur on the staff of a foreign embassy
  • British employees of certain international organisations
  • An individual, who is required to pay their own PAYE Income Tax and NI. These include employees of
  • A foreign embassy or consulate, or certain international organisations who do not voluntarily operate a PAYE scheme, and
  • A foreign employer who has no address in the United Kingdom from which earnings are paid
  • Mariners hired under offshore manning arrangements with no UK employer or host employer


1. Employer units must not set up new employer records using the scheme type DPNI for employees working as carers. Instead, the employer records must be set up using scheme type P.

2. From May 2010, EC Regulation 883/2004 introduced a change to the National Insurance Contributions responsibilities of employers based in other EC member states.

Where an employee works in the UK for an employer based in another EC member state and NI liability arises, the liability will be for both primary and secondary contributions. In such a situation the employer is responsible for setting up (or arranging for a UK agent to set up) an NI only scheme rather than a DPNI scheme to pay the NI liability to HMRC.

More information on how the tax element is collected can be found at PAYE20120.

Employees of embassies / consulates

Embassies and consulates are exempt from UK PAYE Income Tax and NIC liabilities. Employees working for an embassy or consulate in the UK can be liable for tax and primary Class 1 NIC.

Where the embassy / consulate do not make arrangements with HMRC, each employee is responsible for setting up and operating a DPNI scheme to pay their PAYE Income Tax and primary Class 1 NIC to HMRC.

(It is possible that the embassy / consulate will voluntarily arrange with HMRC to operate a PAYE scheme and make payments to HMRC but there is no obligation for them to do this).

UK resident mariners

A UK resident mariner working on a UK flagged ship will be liable for primary Class 1 NIC even if the employer / agent remunerating them is in another EC member state. As a UK resident they would also be liable for PAYE Income Tax.

The mariner is responsible for setting up and operating a DPNI scheme to pay their PAYE Income Tax and primary Class 1 NIC to HMRC.

More information on NI can be found at PAYE75030.