DPNI vs DCNI: which direct-payment scheme applies to you?

If you've started researching how an overseas company pays a UK employee, you'll have run into two acronyms that look almost identical: DPNI and DCNI. They're both HMRC "direct payment" schemes, both used when there's no UK entity to operate normal payroll, but they cover different things. There is also a third, the NI-only scheme, for employers who owe UK employer's National Insurance. Picking the wrong one means deducting the wrong amounts. Here's how to tell them apart.

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The one-line difference

The distinction is simply which deductions the scheme covers:

• DPNI, Direct Payment, National Insurance and Income Tax. The scheme accounts for both PAYE Income Tax and the employee's National Insurance.
• DCNI, Direct Collection, National Insurance only. The scheme accounts for National Insurance only; Income Tax is dealt with another way.

Both are documented in HMRC's PAYE Manual, DPNI at PAYE20100 and DCNI at PAYE20090, so you can check the source directly on GOV.UK.

Are you the UK employee? If you're the one being paid by an overseas company and trying to work out what you owe, our guide to working in the UK for an overseas employer explains it from your side.

When DPNI is the right scheme

A DPNI scheme is the usual route for the classic case: an overseas company with no UK presence, and no UK employer's National Insurance to pay, directly employing someone who lives and works in the UK and is liable to UK Income Tax. Because the employee owes UK tax and there's no UK entity to run normal PAYE, the DPNI scheme is set up so that both Income Tax and National Insurance are calculated, deducted and paid over to HMRC each pay period. This is the most common scheme our overseas clients need.

When DCNI is the right scheme

A DCNI scheme handles National Insurance only. It's used where the employee is liable to UK National Insurance but the Income Tax position is handled separately, for example where the individual settles their UK Income Tax through Self Assessment rather than having it deducted at source. In those cases there's no need for the scheme to operate PAYE tax, so DCNI collects the National Insurance and leaves the tax to the other mechanism.

DCNI is less common than DPNI, and confirming it genuinely fits your situation, rather than assuming it from the name "NI-only", matters, because getting it wrong can leave Income Tax unaccounted for.

Side by side

What both schemes have in common

Whichever applies, the mechanics rhyme:

• Neither can be set up through the standard online employer registration. HMRC's specialist NIC & Employer Office opens these manually, so the application has to be prepared correctly to avoid weeks of back-and-forth.
• Both are reported to HMRC in real time, a Full Payment Submission on or before each payday, just like any UK payroll. See our guide to RTI, FPS and EPS.
• National Insurance still has to be accounted for. A DCNI collects the employee's own (primary) National Insurance through the scheme, with Income Tax dealt with separately, usually through Self Assessment. It does not mean contributions are skipped. If the employer's (secondary) National Insurance is also due, a DCNI is not the right scheme: HMRC's manual is explicit that a separate NI-only scheme is required where secondary contributions apply. That is a third scheme in its own right, PAYE20120, and unlike a DPNI it is set up by the employer and stands in the employer's name.
• Auto-enrolment pension duties can still apply to the UK worker under either scheme. See auto-enrolment for overseas employers.

How do you know which you need?

It takes two questions, not one, and the second is the one most often missed. First, does UK Income Tax need to be operated at source on this employee's pay? If it does, that points to DPNI, which covers Income Tax and the employee's National Insurance together. Second, is the employer's (secondary) National Insurance due? If tax is genuinely handled separately and only the employee's own contributions need collecting, that points to DCNI. But if employer's National Insurance is also due, neither of those is right: HMRC requires a separate NI-only scheme (PAYE20120), opened by the employer and held in the employer's name. Whether secondary contributions arise depends on where the employer is based and which social security rules apply, so it is not a detail to assume either way. Because the answer turns on the individual's residence and tax position as well as the employer's, it is worth confirming before any scheme is opened, a short conversation usually settles it.

Frequently asked questions

Is DCNI cheaper to run than DPNI?
Not meaningfully, the work is similar each period. The right choice is driven by the tax position, not cost. Choosing DCNI to save money when DPNI is correct simply creates a compliance problem.

Can a scheme change from one to the other?
The correct scheme follows the facts. If circumstances change, the position may need revisiting with HMRC rather than quietly switching.

Do both report through RTI?
Yes. Both are reported to HMRC in real time on or before payday.

Related guides

• What a DPNI scheme is, the plain-English explainer for overseas employers.
• Hiring in the UK from overseas, PAYE vs DPNI vs EOR compared.
• How much an Employer of Record costs in the UK, the pricier alternative to a DPNI scheme.
• What a UK employee really costs, the on-costs on top of salary for 2026/27.

This guide is general information, not tax or legal advice, and reflects our understanding of the rules as at July 2026. Your circumstances may differ, please get specific advice before acting.