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HMRC internal manual

PAYE Manual

PAYE operation: international employments: modified NICs: employer required to deduct UK NICs from employees' pay, but not UK tax

Departures from the UK

Paragraph 119 of the CWG2, Employer Further Guide to PAYE and NICs advises employers that from 2006-07 they may apply to operate modified NICs, if they have employees who

  • Are seconded abroad
  • Are non-resident and not liable for UK tax
  • Pay NICs on earnings in excess of the annual upper earnings limit


  • Receive part of their earnings from a payroll abroad

Under this arrangement, the employer accounts for NICs on a best estimate of all earnings that attract Class 1 liability. The exact earnings figures and any residual NICs are then reported by the employer on a NIC Settlement Return (NSR) (PDF29KB) by 31 March following the end of the tax year.

The application for modified NICs for employees seconded abroad is shown at EP Appendix 7B (PAYE82004).