Employment Tax

Moving to and from non-agreement countries

Produced by Tolley in association with Jim Yuill at The Yuill Consultancy
  • 22 Oct 2021 10:40

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

  • Moving to and from non-agreement countries
  • Employee leaving the UK to go to a non-agreement country
  • Liability in practice
  • Employer with no place of business in UK
  • Renewal of 52-week period of NIC liability
  • Voluntary NIC
  • Incoming employees from a non-agreement country
  • Exemption in practice
  • Renewal of 52-week exemption

Moving to and from non-agreement countries

Employee leaving the UK to go to a non-agreement country

Where an employee leaves the UK to go and work temporarily in a country with which the UK does not have a social security agreement, it is possible that a Class 1 NIC liability could continue for the first 52 weeks abroad. For that to be the case three conditions need to be satisfied:

  1. the employer has a place of business in the UK

  2. the earner is ordinarily resident in the UK

  3. the earner was resident in the UK immediately before the commencement of the foreign employment

SI 2001/1004, reg 146(1)

Where all three conditions are satisfied, primary and secondary Class 1 NIC is payable for 52 weeks from the beginning of the NIC week in which the foreign employment begins. It should be noted that this calculation is slightly different from that used to identify the period of exemption for employees coming to the UK from a non-agreement country. Employers who calculate the 52-week period of liability from the actual date of departure may create a period of liability longer than the legislation requires.

See Example 1.

Liability in practice

For the Class 1 NIC liability to arise, all three of the above conditions need to be satisfied. The residence status will usually be fairly clear (although it is worth remembering that the Statutory Residence Test for tax purposes has no application for NIC ― see the Residence and ordinary residence for social security purposes guidance note). Where an employee can be shown to have broken all ties with the UK, such as property and bank accounts, the whole family going abroad, and the period abroad will be four or five years, it is arguable that they are no longer ordinarily resident in the UK at the time of departure and the ongoing Class 1 liability does not arise. Although there is no formal clearance arrangement, HMRC International Caseworkers at Newcastle will usually be

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