HMRC’s surprise NIC shake-up could cost employers six years of back payments

HMRC has issued new guidance on how employers must calculate National Insurance Contributions (NICs) for internationally mobile employees (IMEs) who work partly in the UK and partly overseas. 

The update represents a major shift in HMRC’s position, replacing the long-used all or nothing method with a strict apportionment approach that may trigger significant retrospective liabilities. 

What’s changing? 

Under the apportionment approach, employers must divide salary, bonuses, termination payments and certain share-based awards according to the period in which the employee was liable to UK NICs while the income was earned. 

This is especially critical for deferred or performance-linked pay that spans multiple years and jurisdictions. 

NIC liability arises when income is earned, but NICs are due only when the payment is actually made. HMRC expects employers to review historic NIC reporting and correct errors through the Real Time Information (RTI) system, potentially going back six tax years. 

What employers need to do now 

Employers with UK or global workforces should take immediate action: 

• Review the NIC treatment of internationally mobile employees 

• Identify deferred or multi-year remuneration that may require apportionment 

• Check historic filings and correct them through RTI where necessary 

• Update payroll processes and keep full audit documentation 

• Seek specialist advice for complex cross-border reward structures 

Updates on share awards 

The new guidance applies to certain share awards treated as general earnings and not granting a right to receive securities. Awards that do grant such a right remain subject to existing apportionment legislation. 

How Abbiss Cadres can help 

Abbiss Cadres’ integrated tax, legal and HR specialists support employers in interpreting the updated guidance, implementing the apportionment approach, reviewing historic NIC exposure and ensuring payroll and share plan compliance. 

If your organisation is expanding internationally or managing globally mobile talent, we can help you stay fully aligned with HMRC expectations. 

Has your company got (or had) people on international assignments in the last six years?  

Contact us to assess whether your organisation is at risk under the new rules.