If your business needs to hire overseas employees, you need to know how to formulate a PAYE for them.

In addition to this, you may also want to understand how different types of employees should be taxed.

In this article, we will interpret the basic tax law for overseas employees in combination with official materials.

Check legality of overseas workers


Once you decide to hire overseas staff, you must check that the candidate is legally working in the UK.

Check the candidate’s ID or official shared code.

Open GOV.UK and search for legal right work uk, follow the prompts to verify and check work rights.

If candidates are eligible, they can go further to become your overseas employees.


Paying taxes for overseas workers

When you decide to employ overseas workers, you must pay PAYE tax and National Insurance (NI) for them.

Businesses are required to pay prescribed taxes whether they work for a business temporarily or permanently.

It is important to note that a seconded employee (if you are not actually paid but employed by your business) will still have to report the income and PAYE deduction to HMRC.

What documents are required

If your employee is from overseas and does not have a previous P45 form, you will need to:

  • full name
  • gender
  • date of birth
  • Full address (including zip code)
  • National Insurance Number (if known to the employee)

In addition to this, employees need to be checked for outstanding student loans, as well as a first statement.


What is a Starter Declaration?

A starter statement is a form that new employees need to fill out before their first payday and can help employers use the correct tax code.

It is important to state the facts correctly or you will pay too much or too little tax.

The statement will include:

  • This is the candidate’s first job since April 6 of the current year and they are not receiving Jobseeker’s Allowance, Employment and Support Allowance, State/Occupational Pension or Taxable Incapacity Benefit.
  • This is the only job the candidate has, but has received a job since 6 April of the current year, or received the above allowance but did not receive a pension.
  • The candidate has another job or receives a pension.

This information needs to be fully documented by the business and reported to HMRC when full payment (FPS) is submitted.

What we have mentioned above is only to help you determine if a candidate has the right to work in the UK.

As overseas employees may come from different countries and face different situations, consult our accounting team to help you solve multiple problems.

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