Overseas businesses without a UK base, who wish to hire their first UK employees can ensure that their staff are paying their national insurance and tax through a DPNI scheme.
Our specialist payroll team have put together a guide on how the DPNI scheme works and how we can help set up your UK-based employees.
UK DPNI scheme overview
Overseas employers with no base in the UK are unable to set up a UK payroll for their UK-based employees, meaning that the employees are responsible for this. However, the process of setting up a UK payroll can be complex and such individuals are usually required to use a PAYE Directs Payments procedure (DPNI) scheme, if eligible. Registering for the DPNI scheme ensures the direct payment of national insurance and tax contributions to HMRC.
What This Means
Although all UK residents are obliged to pay income tax and national insurance, it is usually the responsibility of the employer to deduct national insurance contributions from their employee’s salary, however, this is not the case for employers who are based overseas (with no base in the UK) – meaning that the responsibility falls on the employees. However, such employers should understand the DPNI schemes so that they can advise their employees based in the UK and eliminate any anxiety they may be having around ensuring their compliance with tax and national insurance regulations. Employers with no base in the UK are also not responsible to set up auto-enrolment pensions, however, should an employer wish to provide a pension or benefits, they can voluntarily opt for a standard PAYE scheme.
Registering for a DPNI Scheme
Checking eligibility for a DPNI scheme as well as registering for it can be a lengthy and complex process as various requirements must be filled – which can take up to 2 months to complete. The complexity involved in setting up a DPNI scheme will vary depending on where an employer is based as well as if any other income is generated from assets and activities (both in the UK and overseas). All required checks are in place for HMRC to confirm that the employees are required to pay national insurance in the UK and that they are paying the right level of tax.
