Your American employer has no UK payroll. Here is who pays the tax.

UK payroll is the PAYE system, through which an employer deducts Income Tax and National Insurance before paying you. It spreads the tax across the year and keeps you out of large lump-sum bills.

Without it, the liability does not disappear. It simply has no one collecting it at source.

That gap is what this guide covers: who ought to collect the tax, and what happens when nobody does.

Not if it has no presence in Britain. HMRC guidance on employers with no UK presence explains that such an employer may choose to operate PAYE voluntarily, but the ordinary obligation does not reach it.

Presence is the key word. An office, a branch or a UK entity usually changes the answer, and so can a UK business that effectively hosts your work.

So the first question to ask is simple. Does your employer, or anyone connected with your work, have a footprint in Britain?

Where you work for a UK business that is not your legal employer, HMRC rules can require that business to operate PAYE on your pay. They treat it as making the payments, even though your contract sits elsewhere.

This typically covers secondments to a UK affiliate or client. The American company pays you, but the British entity directs the work.

In those cases the British payroll duty lands on the British business. Check whether that applies before assuming the job falls to you. HMRC's guidance on globally mobile employees and PAYE covers these arrangements.

Then you usually become responsible for paying the tax and your own National Insurance directly to HMRC. The mechanism is a direct payment scheme, which the employee sets up rather than the employer.

HMRC's manual on the direct payment scheme describes a version covering both PAYE Income Tax and employee National Insurance. You pay both under one reference.

It works like running a small payroll for yourself. You calculate what is due on each payment of salary and send it to HMRC.

The scheme centres on your own tax and your own National Insurance, and that is the part you should budget for. HMRC describes it in terms of Income Tax and employee contributions, not the employer's share.

Whether employer contributions arise in your case depends on the employer's position and on the social security agreement. Take advice on that point rather than assuming either way.

What you should not do is pay nothing while you wait. The employee side is clearly yours once no British payroll exists.

Possibly. If your US employer sent you to Britain on a temporary assignment, you may stay in US Social Security under the agreement between the two countries. A certificate of coverage is the evidence.

With a valid certificate, British National Insurance generally does not apply to your earnings. Income Tax still does, so the direct payment question does not vanish.

Our guide to the totalization agreement explains who qualifies. A personal move while keeping your job usually falls outside the assignment rule.

Often, yes. Salary that did not pass through British payroll is exactly the kind of income HMRC expects to see on a return, alongside anything else PAYE could not capture.

Our guide to registering for Self Assessment covers the deadlines for getting into the system. A late registration penalty is among the easiest to avoid.

Large bills paid through Self Assessment can also trigger payments on account for the following year. Our guide to payments on account explains why the first bill can feel doubled.

It is worth checking before choosing a route. Some foreign companies without a British payroll pay people as contractors instead, and the label on the contract does not settle the question.

Employment status follows how the work actually happens: control, obligations, and who carries the risk. The GOV.UK guide to employment status explains the tests.

A genuine contractor pays tax through Self Assessment as self-employed, with different National Insurance. A disguised employee can face corrections later, so get the status right first.

There are three common routes, and each moves the work off your desk and back to a business. The first is voluntary PAYE, which the employer runs itself or outsources to a payroll bureau.

The second is an employer of record. A British provider employs you on the company's behalf and handles British payroll, benefits and employment law.

The third is a UK entity, which suits a company planning to hire more people in Britain. It costs more to set up, but it gives the employer a permanent footprint.

Cost plays a part, but rarely the main part. Registering a UK payroll can signal a presence in Britain, and companies worry about the wider consequences, including employment law and corporate tax questions.

An employer of record often answers that concern, which is why it has become common for small foreign teams. The provider carries the local obligations.

Put the request in business terms. A compliant arrangement protects the company as much as it protects you.

Keep every payslip or remittance advice, the contract, and a record of each payment you make to HMRC. Add the exchange rate you used for any salary paid in dollars, and keep it with the month.

Salary paid in dollars converts to pounds for British purposes. Use one consistent method, and note it beside the figures so next year matches.

Keep correspondence showing when you asked your employer about payroll. If HMRC later asks why tax arrived late, that timeline helps.

Treat the gross salary as partly borrowed. Set aside a fixed share of each payment for British tax and National Insurance before you spend any of it.

Paying through a direct payment scheme regularly keeps the balance small. Leaving it to the annual return turns a manageable monthly cost into a large debt with interest.

In our practice we see this more than any other problem with foreign employers. The tax is rarely unaffordable; the lump sum is.

A US citizen still reports the salary in America. Pay for work in Britain is foreign earned income, so foreign tax credits for the British tax usually remove most or all of the US charge.

The American employer may keep withholding US tax meanwhile. That leaves you paying both countries in cash until the returns settle the overlap.

Our guide to avoiding double taxation explains how the credits work across both returns.

Work through these in order. The early steps often remove the need for the later ones.

Keep copies of every message with your employer about how it pays you.

The direct payment arrangement ends with the employment, so tell HMRC when your last salary arrives. Leaving the arrangement open can generate reminders for payments that are no longer due at all.

Your final return then pulls the year together. It shows the salary, the tax you paid directly, and any balance still owed or refundable.

If a new employer runs normal PAYE, give it your details promptly. That keeps your tax code accurate from the first payslip in the new job.

Take an illustrative example: an American data analyst moves to Birmingham and keeps working for a small start-up in Austin. The start-up has no British entity and pays her in dollars, gross, with no British payroll.

For the first six months, nobody collects any British tax. She then learns the liability was hers, registers a direct payment scheme, and catches up on the arrears.

A year later, the start-up hires two more people in London and engages an employer of record. Her pay now arrives with UK tax already deducted, and her own admin shrinks to a normal return.

The first is treating gross pay as net. The British tax is still due, and it grows every month it goes unpaid.

The second is assuming the employer will sort it out. With no UK presence, it usually has no obligation to.

The third is ignoring a UK host business. Where one directs your work, it may be the party that should be running UK payroll.

The fourth is paying the tax once a year instead of as you go. Interest runs on late payments, and the lump sum is far harder to find.

We set up and run the British side for employees of foreign companies through our UK Self Assessment service, including direct payment arrangements and catch-up where months have passed. We also coordinate the US return so the credits line up.

If your employer has no British payroll, send us your contract and payslips and we will set out exactly what you owe and how to pay it, at a fixed fee agreed first. This article is general information, not personal tax advice; take advice on your own facts from a qualified adviser.