Are you a UK employee with an overseas employer? Payroll, and when to use a DPNI scheme.

In a world where employees can set up their ‘office’ from anywhere and flexible working has become ‘the norm’, at Gravita we are helping more and more individuals to make sure they meet their payroll and tax obligations, where they are now technically deemed to be UK resident, but their employer is based overseas.

Read our full guide on DPNI schemes

As a UK resident, you will now be obliged to pay income tax and national insurance (NI). However, if your employer does not have a UK presence, they will be unable to set up a UK payroll and therefore the responsibility falls to you, the employee. As your employer is based overseas, the process of setting up a payroll is not straightforward and you will likely need to use a DPNI scheme. Once you have confirmed that you are eligible to use a DPNI scheme (something which we can help you establish) there are multiple requirements to fulfil and the process can be complicated and lengthy (up to two months).

Areas which will typically have an impact on the complexity of setting up the DPNI scheme correctly include where your employer is established – the rules are different depending on where in the world they are based, and what other income you are generating from assets and activities (both in the UK and overseas), to ensure you are paying the right level of tax, in the right country. HMRC will want confirmation that you are eligible to pay NI in the UK and that you are paying the correct amount; this will also prevent any unpleasant surprises for you, at a later date.

At Gravita, our payroll and tax teams work together to find the right solution for our clients whose employers are based overseas to make sure their net pay is paid in pound sterling, via a UK PAYE scheme, all PAYE liabilities are paid to HMRC and they are complying with UK tax laws (and often the tax laws in their country of origin and where their employer is established).

There are other areas you need to consider on top of this, which include (amongst others) real time information (RTI) submissions (we can make on your behalf) and any auto enrolment requirements.

If you are planning on relocating to the UK but your employer is based overseas and you think you may be caught by this problem, we are here to help and are happy to have a quick complimentary meeting to help you understand if you need to consider a DPNI scheme and what the next steps will be. If you are coming to live in the UK for the first time, there may also be other tax issues to consider, such as the remittance basis, and our tax consultancy team can help with this.

What next?

If you have any questions regarding DPNI schemes, get in touch with our experts here at Gravita.

If you are unsure if this is the right kind of scheme for your circumstances and would like some tax advice, please contact Michaela Lamb.