Overseas employee

National Insurance implications

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Client - UK employer - has a US-domiciled/resident employee. Employee has rarely set foot in UK and certainly never carries out any duties in the UK. Any UK NI liability, in particular primary/secondary Class 1? All the commentary that I can find refers to the treamtent of employees leaving or coming to the UK.

TIA

Replies (9)

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By paul.benny
07th May 2019 16:08

There is no UK NI liability, although there may be some tax obligations in the US.

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Replying to paul.benny:
Psycho
By Wilson Philips
07th May 2019 16:49

Are you sure about that? My reading of the Regulations is that if the employer is resident in the UK then secondary contributions (including Class 1A NIC where appropriate) are payable regardless of the status of the employee.

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Replying to Wilson Philips:
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By David Heaton
08th May 2019 11:27

The employer can't have a secondary liability if the employee has no primary liability because he isn't an 'employed earner', which means someone gainfully employed in the UK. Workers in the UK over state pension age don't have a primary liability but the employer still pays secondary NICs and Class 1A, but that's a different rule. The worker should be liable only in the US under their FICA regime.

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Replying to David Heaton:
Psycho
By Wilson Philips
09th May 2019 09:59

I stand corrected, David, and on re-reading the Regulations it makes sense. Where an employee leaves the UK but continues to work for the UK employer contributions may continue to be paid for 52 weeks. On the basis that all contributions would cease after that time it makes no sense that contributions should be payable for someone that has "rarely set foot" in the UK.

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Caroline
By accountantccole
07th May 2019 17:03

Should they be on a US payroll?

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By Matrix
07th May 2019 22:36

Didn’t the employer address these issues before employing the overseas employee? What does it say in the contract? Have they addressed the federal and state tax issues of the US trade or business?

I think when a previous client looked at this a US entity was required.

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By skhan
09th May 2019 09:47

I have another question. Will DWP issue a National Insurance no?

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By psimonparsons
09th May 2019 13:50

If they are not resident then doubtful that there is any obligation in the UK. So although this refers to a UK employer, are they now actually a US employer? Is there any UK tax liability or reporting requirenent to HMRC?

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