Accountants & Business Advisers

HMRC issues long-awaited guidance on NIC for internationally mobile employees

26 September 2025

Article

Share this article

After 17 years of uncertainty, HMRC has finally clarified how National Insurance Contributions (NIC) should apply to Internationally Mobile Employees (IMEs). This long-awaited guidance brings much-needed clarity to employers and employees alike.

Key Takeaway

NIC must now be applied on an apportionment basis, meaning only earnings relating to UK periods are NIC applicable. This applies to both bonuses and base salary.

Challenges and Considerations

While the clarity is welcome, the practical and retrospective challenges are significant:

  • Retrospective Corrections: HMRC expects employers to look back six years and correct any "errors" via payroll
  • Payroll System Limitations: Many payroll systems are not equipped to handle split NIC treatments within a single month
  • Complexity with Income Tax Rules: NIC apportionment does not always align with income tax rules, adding another layer of complexity
  • Risk of Dual Liabilities: There is a risk of dual liabilities if other countries adopt a different approach

Why the Sudden Certainty?

Previously, HMRC accepted both "all or nothing" and apportionment methods. The sudden shift to a clear stance raises questions about the underlying reasons for this change.

Conclusion

In short, while the clarity is welcome, the practical and retrospective challenges are significant. Employers will need to review historic NIC treatment for IMEs and prepare their payroll processes for increased HMRC scrutiny, which could lead to more compliance risks.

If you wish to discuss this article in further detail, please get in touch with our Global Mobility Tax Services team here