Working Remotely Abroad for a UK Employer: PAYE, NI and the Traps

Legally, nothing in UK tax law stops you being employed by a UK company while you live in Lisbon, Dubai or Singapore. Plenty of people do it. What changes when you move is not whether you can work, but who gets to tax the pay, and that turns on three separate questions.

• UK income tax: do you remain UK resident under the Statutory Residence Test, and where are your duties physically performed?
• The treaty: if both countries want to tax the same salary, which one wins under the double tax agreement?
• Social security: does UK National Insurance keep running, does the host system take over, or (badly planned) both at once?

Everything hangs on your residence position, so start with the Statutory Residence Test before anything else. Broadly there are two profiles. If you go for a few months and stay UK resident, UK tax carries on as normal and the treaty usually protects you from host-country tax. If you genuinely move, become non-resident and do all your work abroad, the taxing rights shift to your new country and the UK should eventually step back.

One caveat before the tax detail: your employer has to agree. Remote working abroad also raises immigration, employment law and data questions that are outside this guide but very real, and many employers now have formal policies capping overseas working days for exactly the reasons covered below.

There is a sequence to getting the UK side right, and doing it in order saves months of waiting for refunds.

Step one: tell HMRC you have left. The standard route is the P85, which you can complete online through your Government Gateway account once you have actually left the UK (if you want to send it before departure, it has to go by post). Include your P45 if you have one. Importantly, GOV.UK is explicit that you should not file a P85 if you are submitting a Self Assessment tax return for the year you leave; the return, with the residence pages, does the same job. Most people with cross-border affairs end up in Self Assessment anyway. One practical wrinkle: HMRC's own online filing service cannot handle the SA109 residence pages, so you will need commercial software or a paper return, and paper returns are due by 31 October after the end of the tax year rather than 31 January.

Step two: the NT code. Where you become non-resident and your duties are performed wholly outside the UK, those earnings fall outside UK tax, and HMRC can issue code NT to your employer so salary is paid without UK tax deducted. The mechanics are set out in HMRC's PAYE Manual (PAYE81645 and following pages). Two features are worth knowing. First, NT is normally operated cumulatively, so if the code arrives some months after you left, the payroll automatically refunds the tax over-deducted since departure. Second, NT switches off tax only, not National Insurance, which is a separate question covered below. HMRC will also expect you to tell them promptly if the overseas arrangement ends or you return to the UK.

Step three: the departure year itself. By default you are UK resident for the whole tax year in which you leave. Split-year treatment fixes that. For employees the usual route is Case 1, starting full-time work overseas: you must be UK resident in the departure year and the year before, be non-UK resident in the following tax year by meeting the third automatic overseas test, and satisfy the overseas work criteria from your departure date, which means genuinely full-time overseas work with tightly limited UK days and UK workdays. If Case 1 applies, the year splits into a UK part and an overseas part, and your overseas-duty earnings after departure fall outside UK tax. If you are not working full-time overseas, other cases (such as ceasing to have a UK home) may still help. Our split year tool runs the conditions in order.

Until the NT code or split-year position is settled, PAYE simply carries on. That is not money lost, it is money delayed: it comes back through the payroll under a cumulative NT code, through the P85 process, or through your Self Assessment return.

The 183-day figure is probably the most misquoted number in expat tax, and it gets mangled in two directions.

Myth one: "if I am out of the UK for 183 days I am automatically non-resident." False. UK residence is decided by the Statutory Residence Test, which looks at days, homes, work patterns and ties. Plenty of people spending under 90 days in the UK remain UK resident because of their ties.

Myth two: "if I stay under 183 days in the host country, it cannot tax my salary." Only sometimes. The employment article in most treaties (based on Article 15 of the OECD Model) exempts a short-term visitor from host-country tax only if all three conditions are met:

• you are present in the host country for no more than 183 days in the period the treaty specifies (the tax year in older treaties, any rolling 12-month period in newer ones, which is a much tighter test);
• your remuneration is paid by, or on behalf of, an employer who is not resident in the host country; and
• the cost of your remuneration is not borne by a permanent establishment your employer has in the host country.

HMRC's guidance at DT1921 sets out the day-counting method used for this test: any part of a day, arrival days, departure days, weekends, holidays and sick days spent in the country all count as days of presence. So a pattern of regular trips can breach 183 days faster than people expect.

The honest summary for employees: short stints abroad do not shift taxing rights by themselves, which is why a two-month workation rarely creates a host tax bill when the three conditions hold. But once you actually move and become treaty-resident in the new country, the picture flips. Employment income for workdays performed there generally becomes taxable there, whatever your day count, and some countries' domestic rules can tax you even earlier. Never rely on the 183-day figure without reading the specific treaty.

An NT code stops UK tax; it does nothing to National Insurance. NI follows its own geography, and the answer depends on which of three groups your destination falls into.

• EU, Gibraltar, Iceland, Liechtenstein, Norway and Switzerland: the default is that you pay social security in the country where you work. If your UK employer sends you temporarily, broadly for up to 2 years, you can usually remain in UK NI as a detached worker, evidenced by a certificate of coverage (the A1/PDA1) issued by HMRC. A permanent remote move, as opposed to a posting, normally means joining the local system.
• Countries with a UK social security agreement (the USA, Canada and Japan among them; HMRC's NI38 guidance lists them all): the agreement decides which system you pay into, and a certificate of coverage from HMRC keeps you in UK NI for the period the agreement allows, so you are not paying twice.
• Everywhere else (no agreement, for example the UAE or Australia): the 52-week rule can apply. You and your employer carry on paying UK Class 1 NI for the first 52 weeks abroad if you are working abroad temporarily, your employer has a place of business in the UK, you are ordinarily resident in the UK, and you were living in the UK immediately before starting the work abroad. After 52 weeks, compulsory UK NI stops.

Notice the trap in the third category: a remote worker who moves to a non-agreement country can find UK NI still being deducted for a year under the 52-week rule while the host country also levies its own social charges, with no agreement to relieve the overlap. Whether the rule actually bites depends on facts like whether the move is temporary, so this is worth checking before departure rather than after.

Once compulsory UK NI stops, think about your State Pension record. Many expats keep it topped up with voluntary contributions from abroad. One recent change to know: HMRC's NI38 guidance states that for tax years 2026/27 onwards you can only pay voluntary Class 3 contributions for periods abroad; the cheaper Class 2 route is now limited to qualifying earlier years.

Your move creates obligations at the employer's end too, and being able to talk about them intelligently makes the conversation with HR much easier.

First, PAYE does not stop just because you have left. GOV.UK is clear that the employer must keep calculating and deducting PAYE wherever the employee works, until HMRC authorises otherwise, either through an NT code or through the section 690 route.

Second, section 690. Where an employee is non-resident (or treaty non-resident, or in a split year) and works partly in and partly outside the UK, section 690 ITEPA 2003 lets PAYE be run on just the proportion of pay relating to UK work. The process changed from 6 April 2025: the old system of applying and waiting for an HMRC direction was replaced by a notification. The employer submits a globally mobile employee PAYE notification specifying the proportion of income treated as outside PAYE, and it takes effect as soon as HMRC acknowledges receipt. Any pre-April 2025 directions have lapsed, so long-standing arrangements needed re-notifying.

Third, host-country payroll. Once your salary becomes taxable where you live, the employer may have local withholding or shadow-payroll obligations and may need to register with the host tax authority, even with no office there.

Fourth, permanent establishment. If you habitually conclude contracts in the host country on the company's behalf, or play the principal role leading to their conclusion, you can create a dependent agent permanent establishment there, dragging part of the company's profits into the host corporate tax net. HMRC's own manuals treat this as heavily fact-dependent, and other countries' authorities take the same approach in reverse. Sales and business development roles carry the highest risk; a home office used for the employer's business can add to it. This is usually the single issue employers care about most.

Everything above condenses into a short list. Do these before you fly, not after.

• Get the arrangement in writing: location, duties, expected duration, permitted UK visits and who bears any host-country costs.
• Start a day-count log from day one, recording UK days, UK workdays and host-country days; our SRT calculator shows exactly which counts matter.
• Work out your residence and split-year position for the departure year before you leave, so you know what the payslips should eventually look like.
• Plan how you will tell HMRC: online P85 after departure, or the residence pages of your Self Assessment return.
• Apply for the NT code once non-residence and wholly-overseas duties are clear, and diarise telling HMRC if you return.
• Pin down the NI position for your destination: certificate of coverage, agreement country, or the 52-week rule, and budget for voluntary contributions afterwards.
• Check host-country obligations: tax registration, local filing dates and whether local payroll or social charges apply from day one.
• Make sure your employer files its section 690 notification if you will keep any UK workdays, and reviews the permanent establishment position for your role.

If you want the whole journey mapped rather than just the employment piece, start with our leaving the UK tax guide. Coordinating the P85, NT code, treaty position and host-country filings is precisely what our Global Compliance Manager service exists to do for employees making this move.