NIM06852 - Class NICs: International - European Provisions

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EC regulations co-ordinate the Social Security schemes of the Member States and are directly applicable to the UK. They can take precedence over domestic legislation when people move between the UK and other Member States. Amongst other things, they are intended to prevent double charging where national rules overlap or to prevent gaps in social security cover.

The rules on determining the applicable legislation aim to ensure that a person is insured according to the legislation of a single Member State at any one time. The basic rule is that people must be insured in the State where they work but it is possible to remain insured in a person’s home State - see NIM33008.

One exception to this rule is where an individual is working in another Member State and realises a gain from the exercise of a securities/share option granted during employment in the UK at a time when he was UK insured. Liability for Class 1 NICs arises under UK legislation by virtue of section 4(4)(a) of the Social Security Contributions and Benefits Act 1992.