For employees · Paying your own PAYE

Your employer is abroad and you pay your own PAYE. Start here.

If you have been told you are on a direct payment scheme, or you have simply noticed that your salary arrives with nothing taken off it, this is written for you rather than for your employer. It is the version nobody sent you when you signed.

What has happened

Your employer has no UK presence, so HMRC cannot require them to operate PAYE. Instead a scheme is registered in your name, and the tax and National Insurance on your salary become your responsibility to account for and pay.

Nothing about your employment has changed. You are an employee with the same rights as anyone else working in the UK. What has changed is that the money arrives before the tax comes out rather than after.

The thing to understand first

A meaningful part of what lands in your account is not yours. Depending on your salary it is commonly somewhere between a quarter and a third once tax and National Insurance are both counted.

People get caught out because the number in the bank looks like a pay rise. It is not. It is the same salary with the deductions still to come, and the bill arrives whether or not the money is still there.

What to do this month

Work out your monthly figure and move it somewhere separate on the day you are paid. A different account is better than good intentions.

Then find out who is running the scheme and who is paying for it. Sometimes the employer arranges and funds it, sometimes they expect you to. Both happen and you need to know which.

Then check what you have already been paid. If several months have gone by with nothing set aside, deal with that now rather than in January. It is fixable, and it gets less fixable with time.

What you should ask your employer for, in writing

A statement that you are on a direct payment scheme and what that means. Confirmation of who runs it and who pays for it. And an acknowledgement that your gross salary reflects the fact that you carry the admin and the liability.

That last point is a fair thing to raise. Your employer is saving the cost and effort of operating a UK payroll. If none of that saving has been passed to you, it is reasonable to say so.

Will you need to file a tax return

Often yes, though not always, and it depends on your wider circumstances rather than on the scheme alone. If you have other income, rental property or savings interest above the allowances, assume yes.

The date to know is 31 January. What surprises people is not the bill but the payment on account that can arrive alongside it, which is a payment towards the following year on top of what you already owe.

Things that go wrong, and what they look like

A wrong tax code, which usually shows up as far too much or far too little coming out. Student loan repayments that nobody has accounted for. National Insurance being handled on the wrong basis because the position for your employer's country was never checked.

None of these are unusual and all of them are correctable. They are much easier to correct in month two than in month eleven.

If nobody has explained any of this

That is common and it is not your fault. The arrangement is unusual, most employers setting one up have never done it before, and a lot of the guidance online is written for the company rather than the person.

If you want it looked at properly, we run these schemes and we deal with the employee directly as well as the employer. There is no charge for telling you where you stand, and if the answer is that everything is fine, that is a useful thing to hear too.