NI-only scheme: what it is and who it is for
HMRC's PAYE Manual describes it in one line: "A National Insurance (NI) scheme is used where the only liability is for primary and secondary National Insurance Contributions (NIC)." An NI-only scheme deals with National Insurance only, not income tax. The employer registers the NI-only scheme in its own name, and can give us authority to act for it.
See the full four step process, enquiry to first payday →
Who it is for
Someone working in the UK for an employer in the EU usually pays UK National Insurance, unless they have a certificate of coverage (an A1) from that country. An employer based in the EU can owe it as well, when the employee works in the UK and UK National Insurance is due. Under the UK and EU Trade and Cooperation Agreement, an employer based outside the UK pays these contributions just as if it were based here.
When someone works in the UK for an employer based in the EU and UK National Insurance is due, it is due on both sides, the employee's and the employer's, so the scheme is an NI-only scheme in the employer's name and not a DPNI or DCNI.
Having no UK office or place of business doesn't on its own remove UK employer's National Insurance, because where a social security agreement applies, it treats the employer as if it were based in the UK.
How it differs from a DPNI
On the NI-only scheme, HMRC's manual says: "The employer is responsible for setting up the NI scheme and paying the NIC to HMRC." (PAYE20120)
A DPNI works the other way round. The employee sets up a DPNI and pays both their income tax and their employee National Insurance to HMRC under one PAYE reference. HMRC's DPNI guidance includes employees of an overseas employer that has no UK address it pays wages from.
HMRC's DPNI page, PAYE20100, draws the line itself: "Where an employee works in the UK for an employer based in another EC member state and NI liability arises, the liability will be for both primary and secondary contributions. In such a situation the employer is responsible for setting up (or arranging for a UK agent to set up) an NI only scheme rather than a DPNI scheme to pay the NI liability to HMRC."
And from a DCNI
A DCNI collects only employee National Insurance, every quarter, and any income tax due goes through Self Assessment. Our guide to DPNI vs DCNI sets the direct schemes side by side.
What happens to the employee's income tax
This scheme doesn't take your employee's income tax off their pay. They pay their income tax through their own Self Assessment or, if they'd rather, through a tax-only scheme in their name.
PAYE20120 says: "If the employee has UK tax liability this will be paid through Self-Assessment or, if preferred, a DPGEN (tax only) scheme."
If you provide expenses or benefits
If an employer also provides expenses and benefits, HMRC set its record up as a "P" scheme instead of an NI-only one, because they expect a form P11D(b) and a Class 1A National Insurance charge. It's a different kind of HMRC record, not a different price, and we charge the same either way.
What it costs
An NI-only scheme costs £157 a month for one employee, and £150 a month plus £7 per payslip for two or more. For one employee, that comes to £2,634 in the first year and £1,884 a year after that, made up of a one-off £750 setup and £157 a month.
How set-up works
We'll ask HMRC for the scheme that fits your facts, and once they have the full facts they may suggest a different one. We give HMRC the full facts when we set the scheme up, and that's the point at which they would tell us to use a different one.
We'd allow four to eight weeks for HMRC to set the scheme up, and that's our own estimate, not a figure from HMRC. The scheme should be registered before the first payday. If pay starts before the scheme is in place, payroll still runs every payday and is reported to HMRC late once the scheme exists. HMRC don't let anyone register a scheme more than two months before they start paying people.
Related guides
- DPNI vs DCNI, the direct payment schemes compared.
- What a DPNI scheme is, the plain-English explainer.
- Example DPNI and NI-only setups, three illustrative cases.
- Employer National Insurance explained.
Employing someone in the UK from the EU?
Tell us where your company is based, where your employee works, and whether they hold an A1. See direct payment scheme setup.
Get startedThis guide is general information, not tax or legal advice, and reflects our understanding of the rules as at October 2026. Your circumstances may differ, please get specific advice before acting.