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Payroll Update: Brexit & NIC Changes

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Since the 1 January 2021, the UK has been rapidly adjusting to the changes brought about by a post-Brexit world. 

With Covid-19 and the ongoing pandemic still dominating the headlines, you’d be forgiven if you’d missed one or two of the changes.

Thankfully, we’re here to get you up to speed, to highlight what’s new, and to help you ensure your business and your clients are compliant with updated regulations.

What’s new?

One of the big changes is around National Insurance Contribution (NIC). 

As of 1 January 2021, rules regarding National Insurance (NI) have been updated for UK workers starting employment in the EEA (European Economic Area), or Switzerland, in addition to workers from the EU, Iceland, Lichtenstein, Norway, or Switzerland coming to work in the UK, whether working on a permanent or temporary basis.

Luckily, we have a wealth of Brexit-related information covering areas such as the sponsorship licence and the EU Settlement Scheme readily available on our website here.

For a full list of guidance, the official government website is an excellent port of call taking you through everything you need to do, from checking your employee’s right to work, and gathering the right information, to operating PAYE tax and NIC payments. Here you will find their Brexit checker tool that provides a list of actions for consumers and businesses operating in a post-Brexit world.

To find out more about the changes to a new employee coming to the UK to work from abroad, click here

For more information on UK employees going to work abroad, click here

Brexit & NIC – Will my employee pay NI to the UK?

Permanent employees

As of 1 January 2021, an employee coming to work permanently in the UK from the EU, Iceland, Norway, Lichtenstein, or Switzerland will only pay social security in one country, usually the UK if that’s where they are working. 

An employee who comes to work permanently in the UK from these countries should begin to pay UK National Insurance contributions from the date of their arrival.

However, there is an exception, an employee of any nationality who has been lawfully residing in Ireland will continue to pay social security contributions to Ireland when coming to work in the UK.

If your employee is going to work overseas, it is vital that you check if the EU country your employee is being moved to has agreed to apply the detached worker rules, which they should have done by 1 February 2021.

Temporary work

Employees on a secondment from the EU, Norway, Iceland, Switzerland, or Lichtenstein may apply for a certificate allowing them to choose which country they pay their social security contributions to, meaning UK National Insurance is not necessarily due.

To be eligible for this certificate, the employee must meet one of the following conditions: 

  • Have been lawfully resident in the EU and then working in the UK both before and after 1 January 2021;
  • Is a national of Switzerland, Iceland, Liechtenstein or Norway working in the UK both before and after 1 January 2021;
  • Is a UK national who was resident in the EU, Iceland, Liechtenstein, Norway or Switzerland before 1 January 2021;
  • Is a person with dual nationality, one of which is the UK and one of which is the EU, Norway, Iceland, Switzerland or Liechtenstein;
  • Is a multi-state worker, meaning that they were working in two or more countries from the UK, EU, Norway, Iceland, Switzerland or Liechtenstein before and after 1 January 2021. 
  • If the originating country has adopted the detached worker rules, contributions can continue to be paid there for up to two years.

Ask HR:4UK’s Payroll Experts

For more information on the NIC changes relating to Brexit, our payroll experts are here to help. If you are considering outsourcing or switching your payroll provider, then look no further. You can switch your payroll to HR:4UK in 3 easy steps and be ready for the new tax year.

Contact us today to find out more.

Call 01455 444 222 or email [email protected]

Disclaimer: Please note this is not legal advice on your circumstances and HR:4UK are not qualified to give medical advice. Our advice is based on our understanding of the information currently available and may be subject to change as and when more guidance becomes available.

Angela Clay

A qualified employment law solicitor and our managing director, Angela has unparalleled legal expertise and decades of experience and knowledge to draw from. She’s a passionate speaker and writer that loves to keep employers updated with upcoming changes to legislation, and is a regular guest speaker on BBC Leicester Radio.