Deal or No Deal: Brexit Social Security Considerations

Last month, HM Revenue & Customs (HRMC) issued a special employer bulletin providing guidance on social security costs in the case of a no-deal Brexit. According to this document, it is the responsibility of employers to contact the applicable authority in each EU location where it has UK employees to determine its social security contributions.

There are further considerations for individuals coming into the UK from the EU which we are still awaiting guidance, specifically regarding National Insurance Contributions (NIC). UK legislation states that contributions can be made after 52 weeks of residence in the UK, but what is unknown is whether it will be 52 weeks from the employee’s exit from the EU or arrival date to the UK once the EU rules are no longer in effect. To this point, this is a very complex issue depending on each employee’s specific pension and social security benefits.

For both UK businesses and employees working throughout the EU, it appears that the implications of this special bulletin could be quite burdensome. It is possible that either employees and/or employers may face double social security costs, in addition to costs of compliance and administration.
When it comes to social security contributions, a No Deal Brexit has implications for stakeholders such as:

UK Inbound Personnel from the EU,

EU-based Employees working in the UK, and

Self-Employed Individuals working in the UK & EU

While more guidance on social security considerations is expected at a later date, we encourage you to reach out to our Reward & Employment Tax Solutions team for more information on the topics discussed here.

To learn more about our tax expertise and our team: https://www.alvarezandmarsal.com/expertise/tax