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Employing Someone Coming from Abroad

Hiring someone from overseas involves specific payroll obligations that differ from employing UK residents. You must verify their right to work, operate PAYE correctly from day one, and apply the correct National Insurance rules based on where they've come from and how long th...

Introduction

Hiring someone from overseas involves specific payroll obligations that differ from employing UK residents. You must verify their right to work, operate PAYE correctly from day one, and apply the correct National Insurance rules based on where they've come from and how long they plan to stay in the UK.

Right to Work Checks

Before a new employee from abroad starts work, you must check they have the legal right to work in the UK. This is a legal requirement that applies to all employers. You should complete this check before their first day of employment and keep records of the documentation you've seen.

Operating PAYE for Overseas Workers

You must operate PAYE tax and National Insurance contributions for all employees coming to work in the UK from abroad, whether they're working for you temporarily or permanently. This applies even if the employee is still technically employed by an overseas business and you don't directly pay them—in these cases, you're still treated as their employer for PAYE purposes.

Information You Need from Your Employee

Because your new employee has come from abroad, they won't have a P45 form. You'll need to collect the following information:

  • Full name
  • Gender
  • Date of birth
  • Full UK address (including postcode)
  • National Insurance number (if they know it)

The Starter Declaration

To work out what deductions to make from your employee's pay, you'll need them to complete a starter declaration. You can use a starter checklist for this purpose. The declaration should state one of the following:

  • This is their first job since 6 April and they have not been receiving taxable Jobseeker's Allowance, Employment and Support Allowance, taxable Incapacity Benefit, State Pension or occupational pension
  • This is their only job, but since 6 April they have had another job, or have received taxable Jobseeker's Allowance, Employment and Support Allowance or taxable Incapacity Benefit—they do not receive a state or occupational pension
  • They have another job or receive a state or occupational pension

You must keep a record of your employee's answers and report this to HMRC on your Full Payment Submission (FPS). You don't need to send the starter checklist itself to HMRC.

You should also find out if your employee has a student loan which is not fully repaid, as you may need to make deductions.

Tax Codes for Employees from Abroad

The tax code you use depends on your employee's circumstances. For the 2025/26 tax year, use the following guidance:

If the employee intends to live in the UK for 183 days or more: Use tax code 1257L cumulative

If the employee intends to live in the UK for less than 183 days: Use tax code 1257L week 1/month 1 (unless the employee is an EU, Iceland, Liechtenstein, Norwegian or Swiss citizen)

If the employee will work both inside and outside the UK but live abroad: Use tax code 1257L week 1/month 1 (unless the employee is an EU, Iceland, Liechtenstein, Norwegian or Swiss citizen)

If the employee is an EU, EEA or Swiss citizen: Use tax code 1257L cumulative

If your employee hasn't given you enough information about their circumstances before their first payday: Use tax code 0T week 1/month 1

National Insurance Contributions

The National Insurance rules vary depending on which country your employee has come from.

Employees from the EU, Iceland, Liechtenstein, Norway or Switzerland

If your employee has a Portable Document A1 (PDA1) issued by a social security institution in one of these countries, you can accept this as proof that they don't have to pay UK National Insurance contributions for the duration shown on the form. Leave the National Insurance letters and values fields blank on your FPS for that employee.

If the employee doesn't hold a PDA1, they should check whether they can apply for one.

Employees from Countries with Social Security Agreements

The UK has social security agreements (sometimes called reciprocal agreements or double contribution conventions) with certain countries including Barbados, Bermuda, Canada, Chile, Croatia, Guernsey, Isle of Man, Israel, Jamaica, Japan, Jersey, Mauritius, New Zealand, Philippines, republics of former Yugoslavia, Republic of Korea (South Korea), Turkey, and the USA.

If the employee has a certificate issued by one of these countries stating they're subject to that country's social security legislation, you can accept this as proof they don't have to pay UK National Insurance contributions for the period covered by the certificate. Leave the National Insurance letters and values fields blank on your FPS for that employee.

Employees from Any Other Country

You and your employee are exempt from paying UK National Insurance contributions for the first 52 weeks of their employment in the UK, provided that:

  • They're not ordinarily resident in the UK
  • They normally work outside the UK for a foreign employer
  • They're sent to work in the UK for a time by that foreign employer
  • When in the UK they continue to work for that employer

Leave the National Insurance letters and values fields blank on your FPS for that employee during this 52-week period.

Reporting Requirements on the Full Payment Submission

For All Employees from Abroad

Every time you pay an employee from abroad, your FPS must include:

  • Name (including surname or family name as well as first and second names)
  • Date of birth
  • Gender as shown on the documents you used to check their right to work
  • UK home address (not your business address) including postcode
  • National Insurance number, if known (never make one up or use a temporary or dummy number)

If an employee doesn't have to pay UK National Insurance contributions, leave the NICs deductions or payments fields blank on the FPS.

For Seconded Employees

Seconded employees are those who work in the UK for a UK resident employer on assignment whilst remaining employed by an overseas employer, or who are assigned to work at a recognised branch of their own employer's business.

The first FPS you send for a seconded employee should answer 'Yes' or 'No' to each of the following questions:

  • Do they intend to live in the UK for 183 days or more?
  • Do they intend to live in the UK for less than 183 days?
  • Will they be working both inside and outside the UK, but living abroad?
  • Are they from a country in the EU, Iceland, Liechtenstein, Norway or Switzerland?
  • Are they under an EPM6 (Modified) scheme for tax equalised expatriate employees?
  • Do they pay back a UK student loan?

Only complete these fields if your employee is seconded—for all other employees from abroad these data items must be left blank.

If the employee has a UK student loan, start making repayment deductions from their first payday.

Record Keeping

You must keep records for the current and previous three tax years. This includes records of your employee's starter declaration and any certificates or documents relating to their National Insurance status.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.

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