HMRC clarifies the treatment of National Insurance contributions for Internationally Mobile Employees
As of 18 September 2025, HMRC’s latest guidance helps employers establish whether they should withhold National Insurance contributions (NIC) on earnings paid to Internationally Mobile Employees (IMEs) and how they should process them through the payroll. Employers must act now to ensure their historic and future NIC compliance for IMEs can be justified in the context of this new guidance.
When is NIC withheld for IMEs?
NIC is generally withheld on earnings at the time of payment if the IME is due to pay social security contributions in the UK at that time. However, IMEs often receive a post-departure payment (such as a performance bonus) after they have left the UK, and the employer must determine whether NIC should be withheld.
Similarly, the employer must determine whether NIC is due to be withheld on salary payments to IMEs who are new to the UK and who, for instance, may be exempt from NIC for the first 52 weeks after their arrival in the UK but that are paid monthly.
Before now, many employers will have considered whether the IME was due to pay NIC based on their location at the date of payment and either withhold NIC in full, or not at all, based on that analysis. HMRC’s position of such an all or nothing approach has historically been unclear. Now, HMRC’s latest guidance clarifies HMRCs view that NIC should be calculated with reference to the period that the payment was earned and apportioned in accordance with employment in both the UK and overseas jurisdictions.
Which employees does HMRC consider to be IMEs?
HMRC considers an employee to be an IME if they:
- live in the UK but work overseas;
- come from overseas for periods of work in the UK;
- are UK or overseas residents who move in and out of the UK to work; or
- may work in several countries and have an employer based overseas.
When should these changes take effect?
HMRC requires employers to review their payroll records for the prior 6 years to see whether the appropriate NIC payments have been made.
They will be actively pursuing employers when an NIC underpayment is found. There is, however, a corresponding prior six-year period for which employers can seek to recover any overpaid NIC retrospectively.
Practical steps to take now
Given the significant impact of this latest guidance, there are some immediate steps that employers will need to action.
- Identify your IME population to understand who in your organisation will be affected. Are there are social security reciprocal agreements in place and does the IME have the appropriate documentation (such as a certificate of coverage/A1)?
- Review what documentation you have in place that confirms the earnings period for payments such as bonuses. If nothing is in place, what can you do in future to keep track of these payments?
- Ensure your business is prepared to process NIC payments correctly going forward. Manual adjustments may be required depending on payroll software capability.
- Assess the prior year positions to identify any underpayments of NIC or retrospective claims to recover overpaid NIC from HMRC (particularly if it will be required to offset additional NIC liabilities following HMRC’s new guidance).
- Understand the implications this may have overseas and the potential for double social security charges. Will multiple contributions be due? Is there a way to recover excess contributions from overseas jurisdictions?
How can we help?
The apportionment of NIC based on the earnings period of payments made to IMEs will undoubtedly create a big challenge for employers to navigate, which can lead to additional cost and complexity.
However, this can be partly mitigated by the potential to recover NIC overpayments for the previous six years, in some cases, so it does also create an opportunity and an incentive for some employers.
Our global mobility team can help you understand the true impact these NIC changes will have on your business, and support you in implementing a practical, cost effective approach to reduce risk and ensure that any opportunity to recover overpaid NIC is acted upon. Please contact our global mobility specialists to discuss how we can support you.
