If you work in the UK for a US company with no UK presence, you operate PAYE yourself under a DPNI direct payment scheme. Which scheme applies, who owes employer's NIC, and how to register.
If you live and work in the UK for a US or other overseas company with no UK presence, that employer is generally outside the reach of UK PAYE — so the obligation falls on you. You register a direct payment scheme with HMRC, almost always a DPNI scheme, then pay your own income tax and primary Class 1 National Insurance under your own PAYE reference. Where the employer has no residence, presence or place of business in the UK and no UK "host employer" stands in its shoes, no employer's secondary National Insurance is due at all.
PAYE is territorially limited. HMRC's guidance for globally mobile employees states that employers based outside the UK are not required to operate PAYE because of those limits, although they may do so voluntarily. That is the basis of the DPNI scheme: HMRC cannot compel a company in Denver to run a UK payroll, so it collects from the person it can reach.
"Presence" is narrower than most people assume. PAYE81610 treats a UK branch, agency or representative office as a tax presence — there must be "something in the UK similar to a branch or agency, office or establishment", meaning a UK address where HMRC can contact the employer, send PAYE literature and enforce compliance. The same page is explicit that an overseas employer is not regarded as having a tax presence simply because it has employees here, nor because it uses UK bankers or solicitors. So a US company with one UK-based engineer in a spare bedroom in Bristol, and no UK entity, office or registered address, normally has no PAYE obligation; one with a UK subsidiary or registered branch usually does.
National Insurance runs on a separate test, and this is where employers get caught out. Under NIM33510, a liable secondary contributor must be resident or present in, or have a place of business in, Great Britain when the liability arises. A UK registered office generally satisfies the residence test even if no business is carried on there, and HMRC also weighs leased premises, signage, a fixed location, UK bank accounts or a delivery address. Whether an employer satisfies the tests "will be a matter of fact" — so it is possible to have no PAYE presence but still be caught for NIC.
HMRC operates four relevant scheme types. The official guidance for employees sets out the first three; the fourth is an employer-side scheme.
If the foreign employer meets none of the NIM33510 conditions — not resident, not present, no place of business in Great Britain — it is not a liable secondary contributor and no secondary Class 1 NIC is due. The employee pays primary contributions only through the DPNI scheme, and those still count in full towards the State Pension and contributory benefits. There is no mechanism for the employee to pay the employer's 15% instead, and no requirement to. Two exceptions matter.
The host employer rules. Where a foreign contractual employer does not satisfy the residence or presence conditions, the Social Security (Categorisation of Earners) Regulations 1978 can treat someone else as the secondary contributor. NIM33730 explains that, for periods on or after 6 April 2014, where a worker employed by a foreign employer provides services to someone in the UK — the end client — that UK person is treated as the secondary contributor and must account for both primary and secondary NIC. It bites on secondments and where a US parent's employee effectively works for a UK group company or customer, but not where the employee works only for the overseas employer's own business.
Voluntary registration. An overseas employer can register as a UK employer, operate PAYE and pay the secondary NIC. Once it does, the DPNI question disappears.
| Situation | Who operates PAYE | Who pays employer's (secondary) NIC | What the employee files |
|---|---|---|---|
| Foreign employer with a UK branch, office or subsidiary | The employer, through its UK presence | The employer | Nothing extra; Self Assessment only if otherwise due |
| Foreign employer, no UK presence, employee works only for that employer | The employee, under a DPNI scheme | Nobody — no liable secondary contributor | FPS on or before each payday; Self Assessment if otherwise due |
| Foreign employer, no UK presence, employee provides services to a UK end client | The UK host employer | The UK host employer (treated as secondary contributor) | Nothing extra; Self Assessment if otherwise due |
| Foreign employer registers voluntarily, or engages an employer of record | The employer or the EOR | The employer or the EOR | Nothing extra; Self Assessment if otherwise due |
A fifth case: where a certificate of coverage keeps the employee in the home country's social security system, UK NIC is not due for that period but UK income tax may still be — pointing to a tax-only DPGEN scheme.
Take a UK-resident employee in England on £70,000, paid by a US company with no UK entity, office or registered address, working only for that company. No student loan, standard Personal Allowance, 2026-27 tax year.
Income tax. The Personal Allowance is £12,570, leaving £57,430 taxable. Basic rate at 20% on the first £37,700 is £7,540; higher rate at 40% on the remaining £19,730 is £7,892. Total: £15,432.
Primary Class 1 NIC. Using the 2026-27 employee rates — 8% between the primary threshold and the upper earnings limit, 2% above — that is 8% on £37,700 (£12,570 to £50,270) = £3,016.00, plus 2% on £19,730 = £394.60. Total: £3,410.60.
Total payable to HMRC: £18,842.60, roughly £1,570 a month, leaving about £51,157 net.
What is not payable: secondary Class 1 at 15% on earnings above the £5,000 secondary threshold would have been £9,750. Because the US employer is not resident or present in, and has no place of business in, Great Britain, that charge does not arise — which is also why a US gross salary is not directly comparable to a UK one. (An annual illustration; in practice PAYE is calculated cumulatively and NIC period by period.)
1. Confirm the employer really has no UK presence. Look for a UK subsidiary, registered branch, representative office, leased address, or a UK entity on the payslip. If one exists, the employer should be operating PAYE and you should register nothing.
2. Rule out a host employer and a certificate of coverage. If you were sent here to work for a UK company, NIM33730 may make that company the secondary contributor; if a certificate applies, you may need a tax-only scheme. Settle both before you call.
3. Register with HMRC by phone or post. The gov.uk guidance is specific: you cannot do this online. Contact HMRC's employer enquiries line and "they'll arrange for someone to call you back to help you register."
4. Have your facts ready — National Insurance number, the employer's legal name and overseas address, your start date, gross pay and pay frequency, the pay currency, and confirmation that the employer has no UK place of business.
5. Get your references and pick your software. HMRC issues an employer PAYE reference and an Accounts Office reference; you then need RTI-capable payroll software, a bureau, or your accountant.
6. Run payroll on or before each payday and submit a Full Payment Submission. For NIC-only schemes HMRC requires gross earnings for NICs and the NIC data, zeros in the taxable pay and tax fields, and code NT in the mandatory tax code field.
7. Pay HMRC by the 22nd of the following tax month electronically, or the 19th by post. If you usually pay less than £1,500 a month you can ask to pay quarterly.
8. Convert your pay to sterling consistently and keep the rate used.
Late RTI filing carries a fixed monthly penalty set by scheme size: £100 for 1 to 9 employees, rising to £200, £300 and £400 — so a single-employee DPNI scheme sits in the £100 band. HMRC does not charge for the first failure in a tax year, nor where all payments on a late FPS are within three days of payday, and gives new employers 30 days to file their first FPS. Where a return is over three months late, a further 5% of the tax and Class 1 NIC that should have been shown can apply.
Late payment is penalised separately. Under HMRC's late payment rules, the first failure in a tax year is not a default; after that, penalties run at 1% to 4% of the late amount depending on the number of defaults, with a further 5% if still unpaid after six months and another 5% after twelve, plus daily interest. The uncomfortable point: these are penalties on you, not the overseas employer, because under a direct payment scheme you are the person HMRC holds responsible.
A direct payment scheme collects tax and NIC in-year; it is not a substitute for Self Assessment. HMRC lists foreign income among the untaxed income that may require a return, and if you need one you must tell HMRC by 5 October after the end of that tax year. Many people on a DPNI scheme are within Self Assessment anyway — foreign investment income, RSUs, a US rental, or the High Income Child Benefit Charge.
If you are American, two more things follow. Your US employer may still be withholding federal income tax; that does not discharge any UK liability and usually needs switching off or reclaiming rather than running alongside a DPNI scheme. On social security, the general rule under a reciprocal agreement is that you contribute where you work, with a detached-worker exception where the employer sends you abroad temporarily. A certificate issued by the other country stating you are subject to its legislation can be accepted as proof that UK NIC is not due for that period — see our guide to US–UK social security and National Insurance. The employer's own exposure — permanent establishment, shadow payroll, state tax — is in what a US employer needs to know about a UK remote worker.
A DPNI scheme is a workaround, not a strategy. Three alternatives exist, in rising order of commitment: registering as a UK employer for PAYE without forming a UK company; using an employer of record, which becomes the legal employer and runs compliant payroll; or incorporating a UK subsidiary once headcount or revenue justifies it. The trade-offs are in our comparison of employer of record versus setting up an entity; US companies weighing corporate exposure too can see our US–UK cross-border business tax service.
Pension auto-enrolment and employment rights sit outside UK tax and NIC, and outside this article's scope. In outline, the duty to automatically enrol applies to a worker aged between 22 and State Pension age who earns at least £10,000 a year and ordinarily works in the UK — and it is an employer duty, not one a DPNI scheme shifts onto the employee. How an overseas employer with no UK establishment discharges it is a question for The Pensions Regulator and employment counsel, not HMRC; the same goes for holiday, sick pay and notice, and our guide to UK pensions auto-enrolment covers the employer duties. On a DPNI scheme, assume nothing is being done for you and ask in writing.
Most of this is mechanical once the facts are settled. What is not mechanical is the fact-finding: whether your employer has a UK presence, whether a host employer is involved, whether a certificate of coverage applies, and whether US withholding needs unwinding. Get those four wrong and you end up on the wrong scheme, which is expensive to correct after a year of filings. If you are setting one up, or have been working here for an overseas employer without one, an ACCA-qualified accountant should review the position first — and, for Americans, alongside a licensed CPA or Enrolled Agent. You can book a consultation or read about our US–UK expat tax service. This is general information, not advice on your own circumstances.