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Employment Tax

NIC settlements for outbound employees with UK employer

Produced by Tolley in association with Paul Tew
  • 22 Mar 2022 12:21

The following Employment Tax guidance note Produced by Tolley in association with Paul Tew provides comprehensive and up to date tax information covering:

  • NIC settlements for outbound employees with UK employer
  • Scope of agreement
  • Operating the agreement
  • NIC settlement return (NSR)

NIC settlements for outbound employees with UK employer

HMRC offers two arrangements that relax the strict PAYE procedures in respect of social security / NIC. One of these is the modified NIC arrangement covering outbound employees who are UK nationals, but who have been sent to work on an overseas assignment by a UK employer, known as ‘EP Appendix 7B ― Modified Class 1 NIC for employees assigned from the UK to work overseas’ (EP APP 7B). The EP APP 7B application form is available at PAYE82004.

Scope of agreement

A modified NIC settlement scheme is available for UK employers that have employees seconded abroad and where their employee satisfies all of the following conditions:

  1. •

    is assigned to work abroad for a period of limited duration, but for more than a complete tax year

  2. •

    is non-resident in the UK and not liable for UK tax on earnings from the relevant employment

  3. •

    has an ongoing liability to UK NIC whilst working abroad

  4. •

    pays Class 1 NIC on earnings in excess of the upper earnings limit for all earnings periods throughout the year, ignoring the month during which the employment starts or ends if that is a part month. In the case of employees with annual pay periods covered by the agreement, their earnings must exceed the annual upper earnings limit, pro-rated if the employment begins partway through the tax year

  5. •

    receives some earnings and / or benefits derived from the employment from sources other than the UK employer, eg from overseas employer

Operating the

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