Update to CWG2
25 March 2021
HMRC has updated the employer guidance for 2021-22 on Pay As You Earn (PAYE) and National Insurance contributions (NICs), to reflect information relating to employees coming from countries that have a social security agreement with the UK, and also for employees coming from countries that the UK does not hold a social security agreement with.
Employees coming from countries that have a social security agreement with the UK
Employers are not required to pay Class 1 NICs in relation to employees who come to the UK from a country which the UK holds a social security agreement with, and they have a certificate which confirms that they are only required to pay social security contributions into that country’s social security scheme.
Where the date on the certificate has passed and the employee can not obtain another certificate from the issuing country, then they must begin paying Class 1 NICs.
Employees coming from countries with which the UK does not have a social security agreement
Employer is resident, present or has a place of business in the UK
Generally, Class 1 NICs, employer’s and employee’s, are payable for employees who come to work in the UK from a country that does not have a social security agreement with the UK. NICs will be payable from the date that the individuals commenced work in the UK. This applies even where the employee is supplied via an agency, whose place of business is not in the UK.
There is, however, an exception to this. NICs are not payable for the first 52 weeks beginning the first Sunday after the employee arrives in the UK for an employee who does not ordinarily live or work in the UK, but who is sent to work here temporarily by their overseas employer, who has a place of business outside the UK, even if that employer also has a place of business in the UK.
Following the 52-week period, employers must pay NICs for those employees, and the normal rules for calculating, paying and recording NICs are applicable.
Employer is not resident, present or does not have a place of business in the UK (and is not treated as having a place of business)
The employer will not be required to pay employer’s NICs, but the employee’s NICs are still payable.
Host employer regulations
If an employer from outside the UK that has no place of business in the UK makes their employees available to another employer to work in their business, the law dictates that the business receiving the workers becomes their employer.
This happens most frequently where a business is supplied with workers by a foreign agency, or employees are loaned to a business from a foreign company linked to theirs. The employer receiving the workers will become liable for both the primary and secondary NICs in respect of those workers.
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