Dive into the world of PAYE investigations. Uncover the facts, implications, and insights in this informative blog
Getting an overseas employee set up on UK Payroll can be complex. Employers in the UK need to manage logistics and potential visa issues for overseas employees.
This can be significantly more complex following the end of the transition period with the EU on 31 December 2020. There is no longer freedom of movement of labour between the UK and EU and there is a new immigration system that treats all applicants equally, regardless of where they come from.
These changes mean that anyone you want to recruit from outside the UK, excluding Irish citizens, need to meet certain requirements and apply for permission first.
These rules are complex and require employees to sponsor most foreign nationals adding a lot of red tape to the process. Businesses that are unfamiliar with the processes and have not previously sponsored overseas nationals in the UK, may need significant training and help to deal with these considerations.
Most employers will need to have a sponsor licence to recruit any worker from outside the UK, including EU, EEA and Swiss citizens. The fees, salary thresholds and skills requirements have also changed.
Whilst recruiting an overseas employee may be worthwhile for highly-skilled roles within an organisation the process of hiring lower-paid workers from the EU is likely to become a thing of the past. There is no specific process to recruit workers for jobs offering a salary below £20,480 or jobs at a skill level below RQF3 (equivalent to A level).
Since 1 January 2021, anyone you recruit from outside the UK for the Skilled Worker route needs to demonstrate that:
- they have a job offer from a Home Office licensed sponsor
- they speak English at the required level
- the job offer is at the required skill level of RQF3 or above
- they’ll be paid at least £25,600 or the ‘going rate’ for the job offer, whichever is higher.
There are also other routes for bringing an employee to the UK, this includes intra-company transfers whereby you transfer a worker from a part of your business overseas to work for you in the UK. In addition, there are some immigration routes where you do not need a licence to hire employees with an unsponsored visa such as Global Talent. The Global Talent route is designed to attract recognised global leaders and promising individuals in science, humanities, engineering, the arts and digital technology.
The flip side of these rules must also be considered when considering sending UK nationals to go and work in the EU. For example, people from the UK who want to work in EU member states will likely require a valid work permit or a long-term residence permit to be able to do so.
Paying tax and National Insurance Contributions
Employers in the UK must operate PAYE tax and National Insurance Contributions for employees coming to work in the UK from abroad. This applies regardless of whether they are working on a temporary or permanent basis.
If the employee is still employed by an overseas business and you do not actually pay them, you are still treated as their employer and are responsible for recording and reporting their earnings and PAYE deductions to HMRC. These are called ‘seconded employees’.
If your new employee has come from abroad they will not have a form P45.
You will need their:
- full name;
- date of birth;
- full address (including postcode); and
- National Insurance number (if the employee knows it).
To work out what deductions to make from your employee’s pay:
- you’ll need their starter declaration; and
- find out if they have a student loan that is not fully repaid.
A reminder that if you currently employ any EU, EEA and Swiss citizens who have not yet applied for settled or pre-settled status, you should advise them they have until 30 June 2021 to apply.
Settled or pre-settled status gives the holder the right to work in the UK as well as other important rights including access to the NHS and the right to travel in and out of the UK.