Tax and social security (National Insurance) implications

When a member of staff is paid in the UK and is working overseas they may remain liable to pay tax and social security on their earnings paid within the UK.  This will depend on their “residency status”.  The employee and University may also become liable for tax and social security in the country that they are working.  The rules that govern tax and social security are different in each country. This means that an individual could be liable to pay tax in a specific country but not the social security and vice versa.  The University is responsible for ensuring that appropriate tax and social security contributions are deducted and paid to the appropriate authorities in both countries. In order to achieve this, the individual may be required to complete overseas tax returns for the country in which they are working.  The University may seek external advice on this, for which any charges will need to be paid by the College.

Where a member of staff is liable for tax in both countries an agreement called a “double tax treaty” may be in place between the countries that allows the member of staff to pay tax in one country.  These agreements are country specific and advice will need to be taken from the University’s tax advisor in relation to specific cases.  

Where a member of staff is liable to pay tax outwith the UK the University may need to procure specialist services to calculate the appropriate tax and facilitate payment of overseas taxes.  This is likely to result in a cost to the College/ Service employing the individual.   It may also be the case that in some instances the tax and social security costs in the overseas country are more favourable than the UK allowing for savings to be made.    

Normally, employees working abroad will pay NICs for the first 52 weeks after leaving the UK.  After this, the compulsory NICs payments will usually cease.  Once NICs payment cease, individuals may wish to continue to pay voluntary NICs in order to retain and continue to accrue their right to some state benefits in the UK.  Payroll should be informed once the employee returns to the UK, so that their pay can be updated accordingly.

It is the responsibility of an employee to arrange the payment of voluntary NICs directly with HMRC.  Individuals may also be liable for Social Security payments in the country of work/residence.  Advice should be sought from HR at the earliest convenience.

The rules regarding Social Security liabilities are entirely separate from tax in most countries, and can also be subject to “bilateral social security” agreements between certain countries and the UK.  Social Security payments may be payable in the country in which the individual works or has permanent residence status.  Social Security payments abroad usually provide a similar entitlement to state benefits in that country as NICs payments do in the UK but it may be necessary to pay for health insurance (e.g. USA).  

In many countries where the employee continues to remain in the UK NI scheme, exemptions from paying towards foreign Social Security contributions may apply.  Further information can be found on the HMRC website (weblink).
The European Commission website (weblink) contains some useful information on working in another EU country, including further details about the social security rights.  

ACTIONS
HRBP/Advisors requests specialist advice (from Policy & Reward, Employee Services (Payroll), University Tax Manager, or external providers.  This will usually incur a cost to the College
HR Services advise employee of tax and NI arrangements which will apply
Employee organises to pay voluntary NIC's if they wish to