Social security agreements

By Tolley in association with Jim Yuill at The Yuill Consultancy
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The following Employment Tax guidance note by Tolley in association with Jim Yuill at The Yuill Consultancy provides comprehensive and up to date tax information covering:

  • Social security agreements
  • The purpose of social security agreements
  • The UK / US social security agreement
  • Brexit

The purpose of social security agreements

Social security agreements exist for three main purposes:

  • to ensure contributions are not paid twice on the same earnings
  • to offer some protection to social security benefit entitlements by allowing contributions to be aggregated or treated as having been paid in another country
  • to ensure contributions are payable somewhere

Agreements can be between two individual countries, such as the UK and the US, or the UK and Turkey, but they could also be agreed by groups of countries. The largest in the latter category is the EU social security agreement (in the form of EU regulations) which covers all the Member States plus some EEA countries (see the EU provisions guidance note). The UK also has a collective agreement with Jersey, Guernsey and most of the other smaller Channel Islands. Most countries with developed social security schemes will have a series of agreements. The detail for this is outside the scope of this note but can generally be found on the relevant country’s social security web page.

Some countries, such as the US, have a fairly standard format for their agreements with only minor variations from country to country (see below for more on the UK / US agreement). In more recent years the UK has tried to use a standard format which generally allows a continuing period of five years in the home country social security scheme, but there can still be variations in the agreements.

The important point is that the provisions within agreements can differ significantly and it is crucial to consider the separate agreements as the need arises. Using the UK as an example, the following variations may exist:

    More on International aspects of NIC: