Non-resident employees

Can I put non-resident employees on my UK company payroll for limited periods of time? If yes, how are they treated under PAYE?

The treatment of UK non-residents depends upon the length of their stay in the UK. Beware that as an employer you might be liable for additional obligations and may need to register the employee with the local authorities for tax and social security purposes, including checks on an employee’s right to work in the UK. In some cases, other means of engagement may be more appropriate, for example, where a service is being provided, it may be possible to engage an individual as a self-employed consultant or contractor basis (or a worker with a contract for services), rather than as an employee with an employment contract.

PAYE and Tax issues

If the non-resident employee’s stay is not long enough to be classified as resident, they are still liable to UK tax on UK earnings. UK personal allowances are only available to certain non-residents.

For employees coming to work in the UK from abroad you must operate PAYE tax and NICs in the usual way, whether they are working for you on a temporary or permanent basis. Note also that if the employee remains employed by an overseas business and even if you don’t actually pay them, if they working for you here in the UK you are treated as their employer. You’re responsible for recording and reporting their earnings and PAYE deductions. The rules that apply here are for ‘seconded employees‘.

Be aware that sometimes double taxation agreements with other countries exempt that country’s residents from UK taxation on UK earnings. There is an HMRC helpsheet on the topic here: HS304 Non residents – relief under Double Taxation Agreements.

Taking on a non-resident employee involves a number of different government regulations. You can find information on the process of taking on a new employee here: Guidance – New employee coming to work from abroad.

The implications of taking on a non-resident employee can get very complicated. You would be well advised to talk to an accountant and lawyer about the details.

Related Topics

HMRC
PAYE

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