National Insurance When You Run A UK Company From Abroad

You did everything right on income tax. You left the UK, you're non-resident under the Statutory Residence Test, and your accountant arranged a workday split so UK income tax only touches the days you physically work here. The income-tax side is small and tidy.

Then a National Insurance bill lands—employer and employee Class 1, on what looks like the whole salary, on both sides. Nothing was apportioned. The careful split you paid for seems to have bought no relief at all.

Here is what has happened, and it is not a mistake. National Insurance is a separate system from income tax, with its own residence-and-presence gateway and no workday split anywhere in it. "I'm non-resident for tax" is a true and useful answer—to the income-tax question. It does not answer the NIC question, which is asked and answered differently. This article walks through why, what the liability looks like, and the narrow routes that can genuinely change it.

Income Tax And National Insurance Are Two Different Systems

It is tempting to treat tax and National Insurance as one thing—they come out of the same payslip and HMRC collects both. Legally they are governed by different statutes and turn on different questions.

Income tax on employment and office income runs through ITEPA 2003. Whether you are caught depends on residence under the Statutory Residence Test (the SRT), and a non-resident's UK liability can be apportioned to UK workdays.

National Insurance runs through the Social Security Contributions and Benefits Act 1992 (the charge) and the Social Security (Contributions) Regulations 2001 (the machinery, including the residence and presence conditions). Liability turns on presence and residence at the relevant time—not on the SRT, and not on where the duties are physically performed.

One doctrinal point worth knowing: "ordinary residence" still exists for National Insurance even though it was abolished for income tax in 2013. So NIC residence is not the SRT, and an income-tax residence ruling does not decide the NIC question. They are different tests, asked under different rules, with different answers.

The trap to hold onto: being "non-resident for tax" tells you about income tax. It says nothing, by itself, about whether UK National Insurance is due.

The National Insurance Residence Test (Regulation 145)

The gateway for National Insurance is regulation 145 of the 2001 Regulations. It sets separate, independent conditions for the employee's own contributions (primary Class 1) and the employer's contributions (secondary Class 1). The structural insight that surprises most people: one side can be caught while the other is not. They are not a package.

Your Own Contributions (Primary Class 1)

For the employee—and a director counts as an "employed earner" here—the condition is met if the earner is resident, or is present, or but for a temporary absence would be present, or is ordinarily resident in the UK at the time of the employment. Four limbs, and only one needs to be satisfied.

Because the test looks at presence at the time the earnings arise, a genuinely non-resident director who is not ordinarily resident here can fall outside primary Class 1 for the periods when they are abroad and earnings arise. But—and this is the catch—presence during a UK working visit pulls those periods back in. Time spent working in the UK is exactly the thing the "present" limb is looking for.

And here is the part that catches people out: there is no apportionment in National Insurance—nothing that mirrors the income-tax workday split. So once the "present" limb is tripped, the charge does not shrink to match your handful of UK days. HMRC's position, and the realistic outcome, is primary Class 1 on the whole annual salary—not a 10% slice to match the income tax. There is a contestable argument that only the earnings tied to UK-presence periods should count, but it is an uphill, under-litigated one, with no tribunal authority squarely deciding it for a non-resident director. The precise scope is a live merits question a section 8 NIC decision and a tribunal appeal would test—not a tidy split you can rely on. And if you have only recently left the UK, even that argument is parked for the first year: the 52-week rule below keeps Class 1 running on the full salary regardless.

The Company's Contributions (Secondary Class 1)

For the employer, regulation 145 sets a different condition with three alternative limbs: the employer is resident, or is present, or has a place of business in the UK when the contributions become payable. Again, only one needs to bite.

This is where the UK company gets caught. "Place of business" is not defined in social-security law, so HMRC treats it as a question of evidence—covered in its manual at NIM33510: things like a UK lease, a UK bank account, a phone listing, fixed premises, and—critically—a UK registered office. HMRC's stated view is that a company is caught if its registered office is in the UK, even if no actual business is carried on there.

A UK-incorporated company must keep a UK registered office under the Companies Act 2006. So in practice the secondary limb almost always bites, via the registered-office limb—but it is a question of fact, not an automatic result of incorporation. A company run entirely from abroad can argue that a bare formation-agent address is not a real "place of business"; HMRC will say it is. And company residence for this purpose follows the central-management-and-control case-law test in De Beers Consolidated Mines Ltd v Howe [1906] AC 455—not the incorporation rule that deems a UK company UK-resident for corporation tax. A company managed wholly from abroad is arguably not "resident" for regulation 145, though the place-of-business limb usually catches it anyway.

Here is a point that trips people up, so be clear about it: this NIC "place of business" test is not the corporation-tax "permanent establishment" concept, and not the VAT "principal place of business" or "establishment" concept. They are three different tests answering three different "where is the business?" questions, and an answer that helps in one can hurt in another. If you are also wrestling with where the company "belongs" for VAT, that is a separate analysis—see VAT registration when you run a UK company from abroad, and do not assume a conclusion in one regime carries across to the others.

Why The s.690 / GME Workday Split Doesn't Help

This is the part that stings, because it is where the careful income-tax planning runs into a wall.

For income tax, a non-resident employee's UK liability can be limited to the UK-workday proportion of their pay. That split sits in section 690 ITEPA 2003—and the section is still very much in force. What changed on 6 April 2025 is the process, not the provision. The old route was an HMRC direction: you applied, and HMRC specified the proportion on which PAYE need not be operated. The Finance Act 2025 rewrote the rules—now spread across sections 690 to 690E—so that from 6 April 2025 the split runs on an employer notification instead: the Globally Mobile Employee (GME) PAYE notification, effective once HMRC acknowledge it. And—this matters—pre-existing section 690 directions ceased to have effect on that date, so a split resting on an old direction needs a fresh GME notification. The mechanics are in HMRC's PAYE manual at PAYE81512.

But whether it is the old direction or the new notification, the mechanism apportions income tax only. There is no National Insurance equivalent. NIC has no workday split, no UK-duties slice, nothing that mirrors the income-tax apportionment.

Here is the trap, and it is an expensive one. The instinct is natural—income tax fell to ten percent, so National Insurance should be roughly ten percent too. It does not work that way. National Insurance is all-or-nothing for a given earnings period; it does not do percentages of duties. Where UK Class 1 is in scope it is charged on the full earnings, not the UK-workday fraction. So the same facts that cut your income tax to ten percent of pay can leave National Insurance sitting on the whole hundred percent—nought or the lot, never a neat ten. That is not an error in the bill; it is the structure of the two systems. HMRC's employer guidance on operating NIC sits in CWG2.

Directors Are A Special Case

A director does not hold a job in the ordinary sense—they hold an office. That has two consequences for National Insurance.

First, office-holders are "employed earners," so directors are within Class 1 in the same way employees are, and a double-tax treaty generally does not shield a non-resident director's UK directorship income. Whether someone holds an office or merely an employment is its own question—see PGMOL v HMRC for how the courts draw status lines, and IR35 and off-payroll working appeals for the related "who is really the employer?" battleground.

Second, directors have an annual earnings period for Class 1 (regulation 8 of the 2001 Regulations), not a weekly or monthly one. That is why a director's NIC tends to be "in or out" across the whole year rather than sliced to the days they happened to be in the UK. The annual period smooths everything into one calculation.

The Non-Resident Director Concession—And Its Strict Limits (NIM12013)

There is one narrow easement, and it is essential to understand that it is an extra-statutory HMRC concession, set out at NIM12013—it is not part of regulation 145. Do not blur the two: regulation 145 is the statutory gateway; this is a separate concession HMRC chooses to apply.

The concession says a non-resident director from a country without a UK social-security agreement, whose only UK work is attending board meetings, is not liable to Class 1 if either:

• they attend no more than 10 board meetings a year, and each visit lasts no more than 2 nights; or
• they attend only 1 board meeting in the year, and the visit lasts no more than 2 weeks.

The limits are applied strictly, and the detail matters:

• Time is not averaged. Eleven one-night visits still fail the multiple-meeting test, even though no single visit is long—it is the count of meetings, against attendance over the tax year, that matters.
• Overstaying a single meeting fails it. One board meeting but a three-week visit is outside the concession.
• It is not multiplied for multiple directorships.
• It is lost entirely if the director is within scope of a UK social-security agreement with another country.

Now the trap. The concession covers board meetings only. If the director does any substantive UK work beyond attending the board—answering emails for a UK client, meeting customers, doing the actual job for a stretch—the concession is unavailable. And here is the cruel part: losing the concession does not earn a discount for the work done abroad. It is binary. "Mostly board meetings, plus a bit of real work" is outside the concession, and the NIC then falls on the full salary with no apportionment for the overseas majority.

Whether your own pattern of UK visits falls inside or outside the concession depends entirely on the exact shape of those visits—how many, how long, and whether any of them involved work beyond the boardroom. That is a factual question about your circumstances, not something that can be answered in the abstract.

Agreement Countries Versus The Rest Of The World

The single biggest variable is which country you live in, because it decides whether an escape route even exists.

Agreement countries. If you are in a country with a UK reciprocal social-security agreement (or within the social-security coordination rules that survive under the UK–EU arrangements), a certificate of coverage can keep you in one country's system and exempt you from UK NIC. The crucial word is "can": the certificate must actually be obtained from the relevant authority. No certificate, no exemption—an entitlement you never claimed protects nobody.

The rest of the world. If you live in a country with no UK agreement, there is no certificate available. UK National Insurance is operated subject to regulation 145, and this is the harder, more common version of the trap. HMRC's manuals on the rest-of-world position sit at NIM33014 and NIM33505.

Two 52-week rules. Recent movers should know about two time-limited rules, both running for 52 weeks:

• Going abroad (regulation 146). UK Class 1 continues for 52 weeks after a worker goes abroad if the employer has a UK place of business, the earner is ordinarily resident in the UK, and the earner was resident in the UK immediately before the employment. For someone who has only recently left, UK NIC keeps running for the first year regardless.
• Coming to the UK (regulation 145(2)). A narrow inbound relief defers Class 1 for 52 weeks for someone ordinarily neither resident nor employed here, working temporarily for an employer whose place of business is abroad. This helps inbound foreign secondees—not a director of a UK company.

Protecting your State Pension. Falling outside compulsory UK NIC has a downside that is easy to miss: gaps in your contribution record can reduce your eventual State Pension. Someone outside compulsory contributions may still choose to pay voluntary Class 2 or Class 3 contributions to fill those gaps. The route is explained at National Insurance if you go abroad (the NI38 / CF83 process). Whether voluntary contributions are worthwhile depends on your wider pension position—it is an option to weigh, not a default.

What This Actually Costs

Put income tax and National Insurance side by side and the mismatch is stark. The figures below are illustrative and rounded—a clean £100,000 salary, a director doing a small share of duties in the UK and most abroad, in a country with no agreement. Do your own sum, or take advice, before relying on any number.

The rates, for 2025-26: the employer pays secondary Class 1 at 15% on earnings above the secondary threshold of £5,000 (both changed on 6 April 2025—the rate rose from 13.8% and the threshold dropped sharply). The employee pays primary Class 1 at 8% between the primary threshold of £12,570 and the upper earnings limit, then 2% above it.

On the illustrative £100,000, that is roughly £14,250 of employer secondary NIC and a little over £4,000 of employee primary NIC—call it £18,000-plus in total (illustrative, rounded). The income-tax split had cut the income-tax base to a small slice of pay; the NIC sits on essentially the whole of it, on both sides. That is the shape of the surprise.

And is that the whole bill? Often not. National Insurance arrears can carry interest, and if the shortfall came from carelessness or a deliberate failure rather than an honest mistake, HMRC can add a penalty on top—the same inaccuracy-penalty regime that applies to unpaid tax. Where a decision reaches back over several past years, the interest alone can be significant. See interest on unpaid tax, how HMRC penalties work, and reducing HMRC penalties for how those are worked out and challenged.

If You Disagree: The s.8 Decision And How To Appeal

National Insurance disputes have their own appeal gateway, and it is not the income-tax one.

HMRC formalises a NIC liability by issuing a decision under section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999—a formal, written decision that says, for example, you are "liable to pay Class 1 NIC of £X for year Y." That it is a formal decision matters: an informal demand, a figure that appears on a payslip, or an accountant simply telling you "you still owe NIC" does not carry appeal rights. If all you have had so far is an informal demand, you can ask HMRC to issue a section 8 decision, so that there is something to appeal. Section 11 of the same Act then gives a right of appeal to the First-tier Tribunal (Tax Chamber). HMRC's own guidance on the mechanics sits at DANSP15200.

The clock is short. You normally have 30 days from the date on the section 8 decision to appeal—and that time runs from the date printed on the decision, not the day you receive it. You appeal in writing to HMRC first (you can also ask for a review by a different officer), and if you still cannot agree, you notify the appeal to the tribunal. Miss the 30 days and you are into late-appeal territory, where the tribunal decides whether to let you in—see late appeal to the tax tribunal. Do not let the deadline slide while you work out the merits.

Two features matter for a director who is, in substance, the company. Both the employer and the employee can be interested parties to a section 8 decision—so the company and the individual may each have a stake in the same appeal. And the tribunal cannot take into account circumstances that were not in existence when the decision was made. Rearranging your affairs after the decision does not change what the tribunal is reviewing.

One more limit, and it is a recurring theme on this site: "it's not fair" is not a ground of appeal. The First-tier Tribunal is a creature of statute with no judicial-review or general fairness jurisdiction—see Hok v HMRC. Grievances about HMRC delay or conduct go to a complaint, then the Adjudicator, then judicial review—not to the tribunal. What the tribunal can decide is whether the law was applied correctly: whether the regulation 145 conditions were actually met, period by period, on your facts.

The filing mechanics are the same as any direct-tax appeal. See how to appeal to the tax tribunal for the procedure and writing grounds of appeal for shaping the grounds—on a NIC appeal, those grounds would engage the regulation 145 conditions and the under-litigated scope question above.

Thinking About Restructuring

People in this position naturally start asking whether a different structure would have produced a different bill. That is a question for joined-up advice, not something to settle from an article—but here are the consequences to understand, framed as options, not recommendations.

A certificate of coverage, where available. In an agreement country, obtaining the certificate is the cleanest route to staying in one system. It is country-specific and must be applied for.

Moving the employer offshore does not automatically kill employer NIC. This is the trap in the obvious restructure. Under the host-employer rule, where a foreign employer with no UK place of business supplies a worker to a UK business, the UK host can become the secondary (employer) contributor. That is exactly what happened in Bilfinger Salamis UK Ltd v HMRC [2024] UKFTT 736 (TC): a Guernsey employer did not meet the regulation 145 residence/presence/place-of-business condition, so the secondary liability fell on the UK host employer instead. Removing the UK company from the picture does not, by itself, remove employer NIC if there is a UK business the worker serves.

Where there is genuinely no UK secondary contributor. If a foreign employer has no UK place of business and there is no UK host business, there may be no secondary Class 1 at all—the employee then accounts for primary-only Class 1 (plus PAYE) themselves under a direct-payment ("DPNI") scheme, the mechanics of which are at PAYE20100. This is a foreign-company fact pattern, not a UK-incorporated one, and it leaves the individual running their own payroll.

A general caution worth stating plainly: rearranging your affairs after a liability has already arisen tends to attract HMRC scrutiny, and—as noted above—a section 8 appeal is judged on the circumstances as they stood when the decision was made, not on a later reorganisation. Restructuring is about the future, not about unwinding a bill that has already crystallised.

What To Do Now

If a National Insurance bill or decision has landed, a few practical steps:

• Check what you actually hold. Is it a formal section 8 decision—which carries appeal rights and a 30-day clock—or only an informal demand? If it is the latter, you can ask HMRC to issue a section 8 decision.
• Diarise the 30 days. If you have a decision and believe it is wrong, note the deadline from the date on the letter and appeal in writing. Don't let it slide while you work out the argument.
• Pin down which country rule applies. Agreement country—is a certificate of coverage available, and has it actually been obtained? Or no-agreement country—where regulation 145 applies, and the board-meeting concession helps only if your UK work really is board meetings and nothing more.
• Work out the full exposure. National Insurance on the whole salary, both sides, plus any interest and penalties—not just the headline contributions.
• Get joined-up advice before changing anything. Any restructuring is about the future; it will not unwind a liability that has already crystallised.

Key Legislation And Resources

Legislation

• Social Security Contributions and Benefits Act 1992—the charge to Class 1 National Insurance
• Social Security (Contributions) Regulations 2001 (SI 2001/1004)—the machinery, including residence and presence conditions
• Regulation 8, SI 2001/1004—directors' annual earnings period
• Regulation 145, SI 2001/1004—residence/presence conditions for primary and secondary Class 1
• Regulation 146, SI 2001/1004—the 52-week "going abroad" continuation
• Section 8, Social Security Contributions (Transfer of Functions, etc.) Act 1999—HMRC's NIC liability decision
• Section 11 of the same Act—the right of appeal to the First-tier Tribunal
• Sections 690 to 690E ITEPA 2003—the income-tax workday split (the GME PAYE notification, as substituted by the Finance Act 2025); no National Insurance equivalent

HMRC Guidance

• NIM12013—the non-resident director board-meeting concession (extra-statutory)
• NIM33014—rest-of-world position (no agreement)
• NIM33505—employees working abroad
• NIM33510—the secondary contributor and "place of business" (including the registered-office view)
• PAYE81512—s.690 / GME workday-split mechanics (income tax only)
• PAYE20100—DPNI / DCNI direct-payment schemes
• DANSP15200—section 8 decisions and appeals
• CWG2: further guide to PAYE and NICs—operating NIC as an employer
• National Insurance if you go abroad—voluntary Class 2/3 (NI38 / CF83) to protect the State Pension

Key Cases

• Bilfinger Salamis UK Ltd v HMRC [2024] UKFTT 736 (TC)—a foreign employer with no UK place of business did not meet the regulation 145 condition; secondary liability fell on the UK host employer
• De Beers Consolidated Mines Ltd v Howe [1906] AC 455—the foundational "central management and control" test for company residence

(The case law here is thin, and deliberately so: the cross-border non-resident-director question runs on legislation and HMRC manuals, not a settled line of authority. That is precisely why the primary-side scope is a live, fact-sensitive merits issue.)

On This Site

• VAT registration when you run a UK company from abroad—the parallel "where is the business?" question for VAT, which is a different test entirely
• IR35 and off-payroll working appeals—the related "who is really the employer, and who pays the NIC?" hub
• PGMOL v HMRC—office and employment status, and how the courts draw the line
• How to appeal to the tax tribunal—filing the section 8 appeal once a decision exists
• Late appeal to the tax tribunal—what to do if the 30 days have already passed
• Writing grounds of appeal—shaping grounds that engage the regulation 145 conditions
• Hok v HMRC—why "it's not fair" is not a ground, and where delay grievances actually go

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.