Cross-border working among senior leadership now extends far beyond occasional business travel. UK companies may have overseas-based directors, senior leaders making decisions abroad and management teams supervising remote workers in other jurisdictions. In 2026, businesses should assess how these arrangements affect PAYE, National Insurance Contributions (NICs), corporate residence, permanent establishment risk and governance.

UK PAYE and National Insurance risks for overseas-based directors

A non-UK resident director of a UK company is an office holder. Salaries, fees or rewards attributable to UK directorship duties can therefore fall within PAYE, even if the director attends only one UK board meeting or is paid by another group company. HMRC has made clear that attending a board meeting is not an incidental duty and is taxable.

While short-term business visitor travellers can have treaty protection, this is often unavailable or limited for director duties. However, the analysis is more complex where a director combines a UK directorship with overseas employment that has regional or global management responsibilities.

A separate analysis is required for NICs. Employee and employer Class 1 NICs may be incurred on amounts paid for UK duties, although social security regulations, certificates of coverage or concessions may alter the outcome. To complicate matters, some EU jurisdictions treat directors as self-employed individuals, which means an unsuspecting director of a UK company could find themselves subject to UK NICs on all their remuneration (including non-UK directorships). Employers should therefore reassess the position when the travel requirements, responsibilities or remote-working patterns of overseas directors change.

Permanent establishment and corporate tax risks from overseas working

HMRC scrutiny extends beyond payroll records. Companies House filings, board minutes, expenses, calendars, approval workflows and internal communications may show where directors and senior managers perform their duties. Failures to operate PAYE, or occasions where a director has been treated as an ordinary business visitor, may therefore be easily identifiable.

Remote working adds another layer of complexity, especially where the director carries out their duties overseas. The recently updated OECD commentary on employment taxation provides a practical framework for deciding when a home, second home or other non-company location may be considered a fixed place of business. Overseas remote working does not automatically create a permanent establishment and cannot simply be ignored because it occurs at a private residence.

A central OECD indicator is whether the individual works at that location for less than 50% of their total working time over 12 months. If so, the location will generally not be regarded as the enterprise’s place of business for fixed place permanent establishment purposes. If the time exceeds 50%, the location may still not be regarded as the enterprise’s place of business; this depends upon whether there is a business reason for working there, such as serving local customers, developing a market, managing suppliers or materially supporting the enterprise in that jurisdiction.

The 50% indicator is a risk-assessment tool, not a safe harbour. Its results do not override domestic law, amend treaties or eliminate other permanent establishment risks. A location may still be considered a dependent agent permanent establishment if an overseas director or employee regularly negotiates or concludes contracts there or plays a principal role leading to their conclusion.

Cross-border management also affects corporate and local compliance. Companies should identify where strategic decisions are made, who can bind the business, and where contracts are negotiated and approved. These facts may influence what is used and considered as a treaty residence, a place of effective management or a UK corporate residence under central management and control principles. Similarly, overseas activity may also trigger transfer pricing, local corporate filings, employment law, immigration, social security, regulatory, health and safety or data protection obligations.

Actions for employers with internationally mobile leaders

Companies need a joined-up review of internationally mobile directors, senior executives and remote workers, covering both UK duties and overseas activity for the UK business.

Remuneration is often the hardest area. A global salary may need to be apportioned between UK and overseas duties, board responsibilities and executive functions, and supported using evidence of duties and working hours gathered at the time.

Expenses and benefits should be reviewed where travel, accommodation or other costs relate to UK directorship duties but are paid or reimbursed by another group company, including whether the UK company has borne the cost through a recharge.

Companies need to carry out the following actions:

• Understand where leadership activity takes place by mapping non-UK resident directors, senior executives and key decision-makers who perform UK duties or direct UK activity from overseas, and recording where board meetings, committee discussions, approvals and strategic decisions occur, including virtual attendance and delegated decisions.
• Review payroll, remuneration and reporting obligations by allocating salaries, fees, benefits and expenses between UK and overseas duties, determining HMRC reporting requirements and considering whether a section 690 direction or other PAYE process is appropriate.
• Assess social security exposures by reviewing Class 1 NIC obligations, relevant social security agreements, certificates of coverage and available concessions.
• Evaluate overseas tax and permanent establishment risks by assessing fixed-place permanent establishment risk in light of time spent working overseas and the business purpose for doing so. Separately, review dependent agent permanent establishment risk where contracts are negotiated, concluded or effectively secured overseas.
• Review wider business and individual compliance requirements by considering corporate residence, place of effective management, transfer pricing and local corporate filing obligations, as well as payroll, withholding, social security, immigration, employment law, regulatory, and health and safety and data protection requirements. Companies should also identify any personal tax filing obligations and potential double-taxation issues affecting internationally mobile individuals.

International arrangements must be monitored as they operate, not merely as contracts or policies describe them. One UK meeting, an approval of UK decisions from overseas or a substantial amount of working abroad can create UK or foreign obligations. Periodic reviews should combine travel data, decision-making records, contractual authority and payroll information. This helps identify exposures early, maintain defensible evidence and establish proportionate governance, payroll, tax and escalation processes.

To understand how to manage the tax and compliance risks associated with internationally mobile leaders, please get in touch with Jo Webber or your usual RSM contact.

Latest related insights