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The short answer
If your employer is outside the UK and has no UK presence, it usually does not have to run PAYE, so HMRC lets the employee pay instead. Under what HMRC's PAYE Manual calls a DPNI (direct payment) scheme, you set up the scheme yourself and pay both income tax and primary National Insurance to HMRC under one PAYE reference. Where only tax is due, HMRC points to Self Assessment or a tax-only DPGEN scheme.
A common diaspora set-up: you live in the UK, you are on the payroll of a Nigerian company, and your salary lands in naira or dollars with no UK payslip. The work is done at your desk in Manchester or Croydon, so the UK expects tax on it. The question is who pays it and how. This guide explains the HMRC route built for exactly this case, what is confirmed on HMRC's own pages, and what you should check directly with HMRC because the published guidance is thin.
Why your employer may not run UK PAYE
HMRC's PAYE Manual (PAYE81511, updated 2 October 2026) says an employer must have a UK presence to fall within PAYE. A presence means things like a branch, agency or representative office. PAYE81610 adds that employees working from their own homes do not create a UK presence for the employer. So a Lagos company with one remote employee in Leeds is usually outside the PAYE system unless it chooses to operate PAYE voluntarily.
There is one important exception. If you actually work for a UK business, even though a foreign company employs and pays you, section 689 of ITEPA 2003 can treat that UK business as the payer, and it must run PAYE. If your day-to-day work is for a UK client of your Nigerian employer, ask that client how it treats you before assuming you must pay yourself.
What the direct payment scheme is
PAYE20100 (updated 2 October 2026) describes a DPNI scheme as the one used when PAYE income tax and primary National Insurance are both due. The employee sets up the scheme and pays both amounts to HMRC under one PAYE reference. HMRC staff call the procedures "PAYE Direct Payments". The page lists who it is for, including:
- employees of a foreign employer with no UK address from which earnings are paid;
- staff of foreign embassies, consulates and certain international organisations that do not run PAYE voluntarily;
- certain clergy and office holders paid mainly by fees;
- mariners hired under offshore manning arrangements.
The first group is the one that matters for most Nigerians working remotely in the UK for a company back home.
When only tax is due
Not everyone owes UK National Insurance on this income. Nigeria has no social security agreement with the UK (GOV.UK's NI38 list does not name it), and HMRC's Employment Status Manual (ESM10025) notes that someone from a non-agreement country may not pay NI for their first 52 weeks in the UK. Where NI is not due, PAYE20120 says income tax is paid through Self Assessment or, if preferred, a DPGEN (tax-only) scheme. Ask HMRC to confirm your NI position before you choose a route.
Direct payment or Self Assessment: how they differ
| Point | Direct payment scheme | Self Assessment only |
|---|---|---|
| Who sets it up | You, as the employee | You register for Self Assessment |
| What it covers | Income tax and primary Class 1 NI (DPNI), or tax only (DPGEN) | Income tax; Class 1 NI is not collected through the return |
| When tax is paid | Through the year under the PAYE reference HMRC gives you | After the year ends: by 31 January, plus any payments on account |
| Main benefit | Tax is paid as you earn, so no large year-end bill | Fewer moving parts if NI is not due |
HMRC's manual pages do not publish the payment frequency, forms or office address for setting up a DPNI scheme. HMRC will tell you these when it sets up the reference. Do not rely on a forum post for the dates; get them in writing from HMRC.
Steps
- Confirm your employer has no UK branch, office or agent, and that you do not work for a UK business that should be running PAYE under section 689.
- Contact HMRC, explain that your employer is overseas with no UK presence, and ask to set up a direct payment scheme. Have your National Insurance number, contract, and pay details ready.
- Ask HMRC to confirm in writing whether primary Class 1 NI is due, which tells you whether you need DPNI or the tax-only option.
- Note the PAYE reference, the payment dates and the amounts HMRC expects, and set reminders.
- Convert each payment of salary to pounds using a consistent method and keep the workings.
- Keep payslips or salary letters from your employer and your bank statements for at least the period HMRC asks.
A worked example
Example only. Ngozi lives in Bristol and is employed by an Abuja software company with no UK office. Her pay is ₦1,500,000 a month, which she converts to pounds for her records at the rate on the day each payment arrives. HMRC sets her up on a direct payment scheme, so she pays tax as she earns rather than facing a single bill the following January. When she spends three weeks working from Abuja in December, she logs those days: under Article 15 of the UK–Nigeria treaty, pay for work done in Nigeria may also be taxed there, and the UK gives credit for Nigerian tax properly due on that slice.
Nigerian side
If you are non-resident in Nigeria and work outside Nigeria, your employer may still be deducting Nigerian PAYE out of habit. Raise it with payroll with your evidence of residence. The fuller Nigerian picture is in UK tax on a Nigerian salary earned remotely and Nigerian employers and UK remote staff.
Where Pryme fits
A Pryme account can receive a naira salary and hold it alongside pounds, so the money stays in the currency it arrived in until you choose to convert it with Swap. The app shows the rate and the fee before you approve. Statements show each payment on its own line, which helps when HMRC asks how you worked out sterling amounts. See multicurrency accounts.
Questions people ask
Can I pay my own PAYE if my employer is in Nigeria?
Yes, where the employer has no UK presence and does not run PAYE. HMRC's PAYE Manual describes a direct payment (DPNI) scheme the employee sets up to pay tax and primary NI under one PAYE reference.
Do I have to use the direct payment scheme?
Not always. If only income tax is due, HMRC's manual says you can pay through Self Assessment or a tax-only DPGEN scheme. Confirm your NI position with HMRC first.
Does working from home in the UK make my Nigerian employer a UK employer?
HMRC's PAYE81610 says employees working from their private homes do not create a UK presence for the employer.
How often do I pay under a direct payment scheme?
HMRC's published manual pages do not state it. HMRC confirms the payment dates when it sets up your reference; keep that letter.
Sources
- HMRC PAYE Manual PAYE20100: DPNI scheme, direct payment of tax and NIC (updated 2 Oct 2026) · accessed Oct 2026
- HMRC PAYE Manual PAYE20120: NI-only schemes and DPGEN tax-only schemes (updated 10 Sep 2026) · accessed Oct 2026
- HMRC PAYE Manual PAYE81511: employer with no UK presence (updated 2 Oct 2026) · accessed Oct 2026
- HMRC PAYE Manual PAYE81610: employers' presence in the UK (updated 2 Oct 2026) · accessed Oct 2026
- HMRC Employment Status Manual ESM10025: off-payroll working, international tax issues (updated 7 Oct 2026) · accessed Oct 2026
- UK–Nigeria Double Taxation Convention 1987 (GOV.UK PDF) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.