Social Security

United Kingdom | HMRC clarifications on NIC apportionment—update

Summary

As of 18 September 2025, HMRC have released their updated guidance regarding the apportionment of National Insurance Contributions (NIC’s) for internationally mobile employees.

HMRC’s position previously on this matter has remained largely unclear, and often inconsistent in their individual messaging with our clients and businesses, which was both accepted and the clear driver for the revised guidance.

The detail

HMRC has shared their official guidance on their position on NIC apportionment for internationally mobile employees. The content of such, whilst welcomed, was largely expected, with HMRC confirming it appropriate to ensure apportionment for earnings which cover periods of employment in both the UK and overseas locations (e.g. equity or deferred compensation). The guidance provides clarity for consistent handling going forward.

However, whilst HMRC accepts that prior guidance has been the driver for confusion for businesses historically, they are also insisting that businesses undertake the necessary corrections within the standard statute of limitations of 6 years. This is in spite of whether businesses have been consistent with their handling to date, and in some cases, in line with direct guidance and confirmation from HMRC at the time of execution.

In addition, the guidance and the requirement to correct, does not just impact deferred compensation, but also general earnings.

As an example, someone who became liable to UK NIC’s midmonth, after the expiry of their 52-week exemption period, would expect to have their earnings apportioned for NIC’s. In practice, companies have historically adopted an all or nothing approach due to the system limitations of payroll. This would also apply in the flip scenario, with someone working outside of the UK and subject to the 52-week ongoing liability.

As noted, the guidance itself is well received and gives good clarity for handling on a go forward basis. The big issue here is the requirement to retrospectively correct, which will put considerable administrative pressures on businesses, particularly those with a large globally mobile population. The key highlights are listed below:

• HMRC agrees that apportionment of NIC’s is necessary where appropriate, considering periods where an individual is in employed earners employment in the UK and subject to UK NIC’s
• HMRC expects businesses to review their RTI submissions for the past 6 years and make any adjustments via payroll to ensure correct handling in line with the new guidance
• HMRC have confirmed that they do not acknowledge or endorse the operation of any ‘practices not to collect’ and ‘all or nothing’ approaches despite prior unofficial guidance and discussions from HMRC representatives which to date, have gone unquestioned by HMRC, and used in good standing of the historic discussions.
• NIC apportionment should not be limited to deferred compensation (equity, trailing bonuses/cash award plans) and the same methodology should apply to general earnings where appropriate.
• The guidance does not provide any further clarity on how to mitigate dual charges when dealing with countries that apply their own rules unilaterally. Something that has been questioned for many years with many individual written requests left unanswered.

What next?

The guidance puts an incredible administrative burden on businesses to review their prior handling of NIC apportionment for their employees, as well as a huge burden on HMRC to process such corrections which cannot have been considered at the time of creating this guidance. This is despite the overwhelming consensus from industry experts that the application of the guidance should be on a go forward basis only and not look to burden companies with retrospective correction especially for those that acted consistently and in good faith.

Our experts at Vialto Partners are aligned with industry specialists of the need to have a fair and practical approach to resolution of retrospective matters. But in light of the recent guidance, we are at hand to help you navigate the recent changes for both future handling, and any retrospective adjustments that are needed.

Contact us

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

Craig Smith
Senior Manager

Gary Chandler
Director

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