Brexit Update on International Social Security

Further information may be released closer to the end of the Brexit transition period, but of course, employers need to consider the possibility of a ‘No Deal’ Brexit now in relation to their planning for 2021 onwards as it may not become clear for some time yet what the ongoing position will be.

Currently, the position that HMRC has taken is that anyone who is going on assignment overseas to the EU from the UK should continue to apply for an A1 certificate under the current and existing rules as they are protected by the Withdrawal Agreement which was put in place at the start of the Brexit negotiations, and that this should continue until at least the end of the 2020 calendar year. HMRC are currently issuing certificates covering the full period of an overseas assignment (assuming it falls within the criteria for an A1 certificate to apply), even past the end of 2020, meaning that the employee can continue to be covered within the scope of UK national insurance for the full period of the international assignment and employee and employer UK National Insurance contributions should continue. Of course, this position may change as more information emerges.

The main concern arises when we consider how each EU host location will deal with social security following the end of 2020. HMRC has previously issued guidance to employers who have posted workers to suggest they contact the host location’s social security authorities and confirm the expected position in that country for their employees and whether social security in the overseas location will be expected for those employees following the end of the transition period. However, each country appears to be dealing with things differently and again, this may change in the coming weeks. For example, some countries are not issuing A1 certificates to UK posted individuals past the end of 2020, in case there is a ‘No Deal’ Brexit.

With a ‘No Deal’ Brexit, or even an arrangement which is not in line with current regulations, there may be additional costs to consider if the host country also seeks to recover social security (both employee and employer contributions, depending on the location) as well as HMRC continuing to require UK Class 1 NIC to be paid, even if this is for a specified period of time and there will likely be no possibility of relief from these double costs. One would hope that common sense would prevail in such circumstances and either the host location or the UK would “relinquish” their right so social security contributions.

Accordingly, whilst the position continues to be so unclear, we are unfortunately unable to provide a definitive answer to the many questions that this article raises and the best way to proceed for UK businesses with a posted worker population, particularly in relation to new overseas assignments which are UK touching.

However, it would be best for employers to plan for the worst-case scenario of the possibility of double social security costs for posted workers within the EU until such time as the position becomes clear. As soon as further information is released, our Global Mobility team will be updating customers with guidance and if you have any questions now or in the future, please contact them on global.mobility@activpayroll.com.