Overseas Director and PAYE

What is the problem?

If the company has been given a PAYE code of NT (or even if it had not, but the director was neither resident nor working in the UK and hence, not subject to UK income tax in the first place), UK income tax is not deducted from any of the director's remuneration whether in the form of salary or bonus.

If the director is a Thai national working abroad, he is not subject to ee's NIc in the UK on his salary or bonus, large or otherwise, and the company is not subject to er's NIC.  I am no expert on the social security regulations applicable in Algeria or Thailand, if any.

Thanks for the propmpt reply Euan

Thatnks for the prompt reply Euan. What do you think is the liability for Employers and Employee's NI. I'm clear on the income tax isue at the code is NT. However, does absenmce from the UK need to be afor a full 52 weeks before the company ceases to deduct NI from the salary?

The 52 week rule

... only applies if the employee was ordinarily resident in the UK and was actually resident in the UK before leaving.

What about the bonus?

Hi Euan

Assuming the employee was UK resident before he left , I take it that the salary paid to him for m52 weeks after his leaving date would attract Employers and employees NI charge?  Howver what about an end of year bonus paid to him after the 52 week period had expired? Would this escape the NI charge?

Waterangelica

I'm no expert but should he really have a one man limited company UK registered if he a) he isn't a UK resident and b) he isn't working in the UK ?? What about dual taxation and residency of the company if the care and control is outside the UK ??

NI ER

isnt liability to ni'er based on the company's location... ?

so if its a Uk ltd co. its presumably still liable to nier ? ...even if emloyee non-resident and has no tax /niee liability

NI on overseas employment

NI would be payable where

The employer has a place of buisness in the UK and

The employee is ordinarily resident in the Uk and

The employee was resident in the UK immediately before taking up the employment

Contributions are payable for the first 52 weeks unless employment is within the EC or in a country with which there is a reciprical agreement

Important to note that NI defination of resident and ordinarily resident is not the same as the tax defination.

More information can be found in guidance booklet NI38