Working remotely abroad for a UK employer: tax and PAYE rules

Key points

• Non-residents performing duties wholly abroad are not subject to UK Income Tax on foreign workdays.
• HMRC PAYE NT (No Tax) code prevents double payroll withholding.
• Any workdays performed physically inside the UK remain subject to UK tax.
• Host country tax residency, social security, and local employment laws apply.
• Corporate Permanent Establishment risk for the UK employer must be managed.

UK Income Tax and the PAYE 'NT' code

By default, UK payroll software automatically deducts Income Tax and National Insurance under PAYE regardless of where the employee is sitting. If you have moved abroad permanently and become non-resident under the Statutory Residence Test, employment duties performed outside the UK are not subject to UK Income Tax.

To stop inappropriate UK tax deductions, you or your employer must contact HMRC to request an 'NT' (No Tax) code. HMRC issues this code once satisfied that you are non-resident and performing duties wholly or almost wholly overseas. Without an NT code, tax will continue to be withheld, requiring a year-end refund claim via Form P85 or Self Assessment.

Working trips back to the UK

If you hold an NT tax code and return to the UK for business meetings, conferences, or work projects, those UK workdays become taxable in Britain on a time-apportioned basis (UK workdays divided by total workdays).

These UK workdays must be reported to HMRC either via a modified Section 690 PAYE arrangement operated by your employer or on your annual Self Assessment return with SA102 (Employment) and SA109 (Residence) pages.

• Keep an exact log of all UK workdays and travel arrival/departure dates
• Incidental UK duties (such as checking emails during a holiday) can sometimes be excluded if strictly incidental
• Substantive meetings, management decisions, or direct fee-earning work inside the UK are always taxable

Employer corporate risks: Permanent Establishment and local labor laws

Many UK employers refuse overseas remote work requests due to cross-border corporate exposure. If a senior employee or sales director regularly concludes contracts or manages key business operations from an overseas home, the foreign tax authority may determine that the UK company has created a taxable Permanent Establishment (PE) or branch in that country.

In addition, host countries often require employers to register local payroll, deduct local social security, and adhere to mandatory local employment protections (such as mandatory severance, working hour caps, and statutory leave).

• Permanent Establishment (PE) risk: assess employee seniority, contract-signing authority, and host country treaty definitions
• Social security / NICs: check for reciprocal bilateral social security agreements or EU multi-state worker rules
• Alternative structures: Employer of Record (EOR) / global PEO, or transitioning from employment to an independent B2B consultancy arrangement