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PAYE and NI for UK Employee living in Portugal

PAYE and NI rules and best practices for a UK company with an Employee in Portugal

At the moment I am a UK resident and I am also employed for a UK company (not mine). I am planning to start a limited business in the next couple of months and move permanently to Portugal shortly after that. I will then become an employee (and director) of my UK based company but resident in PT.

From what I have been reading online so far once I leave the UK and fill in the P85 form, HMRC will then issue me a NT PAYE tax code. The first question I have is: are there circustances where the HMRC might not issue such code or given the described scenario this is what I should expect? And should I hire myself before moving and then update the payroll accordingly or should I first move, get the new tax code and then hire myself?

The NI contributions seems even more confusing. The GOV.UK website says that "Usually, your employee pays social security contributions to the country they’re working in." but does that mean that the company should not make any Employer NI contributions whatsover or does it mean that the company would have to make those contributions to the Portuguese NI scheme? Or in other words, is a legal entity in PT required?

Thanks in advance for any guidance on this and apologies for posting anonymously but I am still employed by another company at this stage.


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By Matrix
14th May 2018 16:45

I would run the business as self-employed while in the UK and take specialist advice on how to run it in Portugal.

If you set up a UK company now and then run it from Portugal then it will get very complicated and you will end up incurring (in my view, unnecessary) professional fees in both countries.

You are correct that you would pay the equivalent of Portuguese NI and not UK NI.

Thanks (1)
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