Social Security

United Kingdom | HMRC clarifications on NIC apportionment

Summary

In a welcomed move from HMRC following numerous stakeholder questions in regards to the apportionment of NIC’s, HMRC has recently shared some draft guidance in respect of National Insurance Contributions (NICs) on earnings for internationally mobile employees. HMRCs position previously on NIC apportionment for internationally mobile employees has remained largely unclear and has been a staple agenda point within HMRC’s Expat Forum (which itself was ended in 2024) for a considerable amount of time.

The detail

HMRC has shared their initial draft guidance with a select group to review their position on NIC apportionment for internationally mobile employees before it is officially published. Whilst we appreciate that this is a draft and despite welcoming some much needed clarity on the expectations of HMRC, there are still quite a few unknowns which we hope will be subject to further comment and change.

For bonuses, the draft guidance seeks to confirm the following:

• Where a bonus is paid to an employee for their work carried out fully or partially outside of the UK, NIC liability will only arise on the amount of the bonus earned whilst the employee is resident/ordinarily resident and present in the UK.
• Where a bonus is paid to an employee whilst abroad, for work carried out in the UK, NIC liability will only arise on the amount of bonus relating to the time when the employee was resident/ordinarily resident and present in the UK.

In both scenarios, the stance confirms apportionment is necessary when it comes to NIC liability on award payments with an earnings period that covers both a period of UK presence/residence, and duties carried out overseas.

The draft position provides clear guidance and examples in this regard which will remove a lot of uncertainty from employers and their advisers in being compliant, albeit we do contest HMRC’s view that ‘this has always been the understanding of how liability to NIC’s arises’ given the multiple instances of HMRC alluding to an ‘all or nothing’ approach in certain situations.

What next?

Whilst the draft guidance covers a number of key areas including bonuses, there is still uncertainty that needs to be addressed in a number of areas of the guidance, including:

• The impact on broader remuneration outside of bonuses (e.g. salary, termination payments).
• Managing mid-month apportionment and how this interacts with the current application of NIC codes in payroll software.
• How to mitigate dual charges when dealing with countries that applies their own rules unilaterally (e.g. a host country that applies an all or nothing stance).
• Further clarity on the fleeting references made to the ‘secondary contributor’ with no reference to such in the examples, which may provide uncertainty to businesses.
• The extent to which HMRC will look to recover NIC’s on a retrospective basis for a time absent of clear and concise guidance.
• Practices not to collect — HMRC have remained silent on their stance of not seeking collection of NICs (without conceding that they are technically due) involving employees who receive payments after leaving the UK permanently, and whilst not remaining subject to UK legislation.

Our experts at Vialto Partners will continue to work closely with HMRC on the creation of this guidance with the key aim of ensuring clear and concise instruction for businesses, and a fair and practical approach to resolution of retrospective matters. We will be sure to provide further updates as the matter progresses. At present, HMRC have confirmed that they will provide further guidance and responses to our questions by 30 May 2025.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Gary Chandler
Director

Craig Smith
Senior Manager

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