UK companies with overseas directors should review their payroll rules following fresh HMRC guidance.
Living abroad and receiving a foreign salary does not remove your UK tax duties. If an overseas director performs duties in the UK, part of their earnings may trigger UK tax. This requirement creates a clear compliance risk for international boards, and it echoes the same cross-border complexity that expats and non-residents face when navigating UK tax obligations.
What HMRC Has Clarified
HMRC confirms that UK company directors cannot use standard Short-Term Business Visitor rules for director duties.
This restriction covers in-person board meetings. HMRC considers attending a UK board meeting a substantive duty rather than an incidental task. Earnings linked to those UK visits may need to go through the PAYE system.
Assuming a director stays outside UK payroll rules because they spend only a few days in the country is a costly mistake.
PAYE Can Apply Even if Paid Abroad
A director might live overseas, receive pay from a foreign parent company, and enter the UK only for board meetings. That setup does not automatically protect the company from PAYE.
Companies must assess the work done in the UK and identify what share of income attracts UK tax.
For mobile cases, employers should use HMRC’s fast-track PAYE notification process. This system allows companies to run PAYE on the estimated UK portion of earnings. HMRC replaced the old formal Section 690 direction wait-time with this notification setup.
Companies must not split salary figures informally without applying the formal PAYE rules.
National Insurance Rules Are Changing
The UK government plans to formalise a National Insurance concession for non-resident directors who make limited UK board visits.
This concession applies under strict conditions, such as limits on the number and length of visits. It is not a broad exemption from National Insurance.
Income Tax and National Insurance follow different rules. For the 2026/27 tax year, the Employer National Insurance rate stands at 15%, while the annual secondary threshold is £5,000. Because this threshold sits so low, even small income allocations for UK visits can quickly trigger noticeable National Insurance costs.
Do Travel and Hotel Costs Create Tax Risks?
Reimbursed flights, hotels, and meals for an overseas director are not automatically tax-free.
Tax treatment depends on the journey’s purpose, the workplace type, and whether a statutory exemption applies. Companies should review travel policy tax rules rather than assuming board travel is fully exempt.
What UK Companies Should Do Now
- Review Travel and Duties: Audit which directors visit the UK, their exact duties, and where their salary originates, particularly for limited companies with cross-border boards.
- Check Payroll Status: Confirm whether PAYE or National Insurance applies to their visits.
- Verify Documentation: Check social security coverage certificates (such as A1 forms) and review expense policies.
- Submit Notifications: File the required HMRC PAYE notifications to avoid sudden tax adjustments as part of your broader tax planning.
Ignoring these steps can cause underpaid tax, backdated interest, penalties, and extra reporting work.
Need Help with Overseas Director PAYE?
Cross-border director tax becomes complicated when PAYE, National Insurance, tax treaties, and foreign payroll rules intersect.
At Lanop Business and Tax Advisors, we review your international director setups, identify UK payroll exposure, and implement correct HMRC reporting. Fixing these arrangements today is easier and cheaper than correcting mistakes during an HMRC check.
Don’t wait for HMRC to flag the issue. Contact Lanop’s tax advisors today for a free consultation on your international director payroll setup.
