You work in the UK for a company abroad. Here's how your tax and NI actually work

You live in the UK and you've taken a job with a company based overseas, maybe in the US, the EU or Australia. Your salary lands in your account in full, with nothing taken off for tax or National Insurance, and now you're wondering what you're supposed to do about it. You're right to check, and the good news is this is a well-worn path with a clear answer.

Why nothing is being deducted

Your employer is based abroad and has no UK entity, branch or place of business. A normal UK employer runs PAYE and hands you a payslip with tax and NI already taken off. An overseas employer with no UK presence usually isn't required to operate PAYE in the standard way, so your pay often reaches you gross.

Here's the important part: that does not make your income tax-free. If you live and work in the UK, your employment income is normally taxable here. What's happened is that the job of accounting for your UK Income Tax and National Insurance has landed with you, rather than being handled automatically at source.

The bit most people get wrong: it isn't just a tax return

The common assumption is "I'll sort it with a Self Assessment at the end of the year." A tax return can deal with the Income Tax. But it's the National Insurance that catches people out: as a UK employee you normally owe Class 1 primary NI (unless you stay covered by another country's social security system, for example with an A1 or a certificate of coverage), and Self Assessment doesn't collect that. Leave it and you can build up NI gaps that affect your state pension and certain benefits, plus a tax bill that arrives in one lump.

Which scheme applies depends on whether your employer owes UK employer's National Insurance. Where your employer has no UK place of business, owes no employer's NI (usual for employers in countries such as the US), and you aren't working for a UK business on its behalf, you'll usually need a DPNI scheme, rather than the NI-only scheme used by employers in the EU, the EEA and Switzerland, or your employer's own UK PAYE. If you're placed with a UK client, that client may have to run PAYE on your pay instead. It's a direct-payment PAYE scheme that collects the correct Income Tax and National Insurance each pay period, giving you a proper payslip, just like any UK job. And crucially for you: a DPNI scheme sits in the employee's name. That's why you can get one set up even if your employer overseas can't or won't deal with UK payroll. If your employer is in the EU, the EEA or Switzerland, it usually does owe employer's National Insurance, and the route is then an NI-only scheme that your employer registers in its own name, with your Income Tax paid through Self Assessment or a separate tax-only scheme.

DPNI, DCNI or NI-only: which one applies, and how it is settled

These are the three schemes that collect National Insurance. HMRC also have a fourth type, DPGEN, a tax-only scheme set up by the employee, used for Income Tax alongside an employer's NI-only scheme or where no UK NI is due. Which one applies turns mainly on whether your employer owes employer's National Insurance:

If you're not sure which is which, that's normal. We will ask HMRC for the scheme that fits your facts, and they may suggest a different one once they have the full facts. Our DPNI vs DCNI guide walks through the difference, and the plain-English DPNI explainer covers the basics.

Why timing matters, the first-payday point

A DPNI or NI-only scheme is a manual HMRC application, it can't be opened through the normal online employer registration, so it takes longer to set up than a standard scheme. That's exactly why it's worth starting around your first payday rather than letting it drift.

Catch it early and it simply runs quietly in the background: right tax, right NI, every payday. Let it run for months first and you're looking at back-dated tax and NI to settle in one go, and the hassle of putting a scheme in place retrospectively. Sorting it at the start is far less stressful than untangling it later.

What you actually need to do

In practice there are two ways this gets handled:

• Your employer sets it up and runs it. Some overseas employers are happy to, and it's a good outcome. Many, though, don't have the UK knowledge or the appetite to run a UK payroll for one person.
• You get it set up in your name and run for you. Because a DPNI is in the employee's name, you don't need to wait for your employer to act. Someone still has to make the manual HMRC application and run the payslip each period, but that part can be handled for you.

Either way, the work is the same: the HMRC application, then a payslip each pay period with the right Income Tax and NI, reported to HMRC in real time. Want a sense of the full picture including employer costs? The cost of a UK employee guide lays out the numbers, and if you're weighing routes, the route finder points you the right way in a couple of clicks.

The bottom line

Working in the UK for a company abroad is completely fine, thousands of people do it. You just need the right scheme in place so your Income Tax and National Insurance are paid properly. For a DPNI it sits in your name, and for an NI-only scheme it sits in your employer's. Either way it's a specialist setup that HMRC handles manually, and the sooner it's in place the simpler your life. Get it running from the start and it takes care of itself.

Related guides

• What a DPNI scheme is, the plain-English explainer for the scheme in your name.
• DPNI vs DCNI, which direct-payment scheme applies to you.
• What a UK employee really costs, the full picture including employer on-costs.
• Hiring in the UK from overseas, the three routes compared for employers.

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.