Employment related securities bulletin 66 (May 2026)
Find out important information about the employment related securities (ERS) reporting requirements for short-term business visitors (STBV).
This guidance gives more detail about the change to employment related securities (ERS) reporting requirements for short-term business visitors announced in Employment related securities bulletin 64 (February 2026).
Employment related securities (ERS)
ERS are shares and other securities that are acquired by an individual by reason of an employment.
The most common types of ERS are:
- share options — the right to buy a certain number of shares at a fixed price, some time in the future
- share awards — actual shares rather than share options, that are provided for free or bought for less than their market value
A company might grant options or award shares using a share scheme. A company can run more than one share scheme at the same time and can offer both tax advantaged and non-tax advantaged share schemes depending on eligibility.
Short-term business visitors
Short-term business visitors (STBVs) are individuals who come to the UK temporarily as part of their work or training and generally do not become tax resident in the UK. Typically, they remain employed by their overseas employer.
Host employers
For STBVs who are temporarily working for a company in the UK, but who are employed by a separate overseas entity, the host employer is the company in the UK.
The host employer is responsible for operating PAYE even though the overseas company bears the STBV’s remuneration costs.
Where an EP Appendix 4 arrangement is in place, it is not necessary to operate PAYE provided a double taxation agreement will cover any UK Income Tax that would be due during the visit and no National Insurance contributions are due.
To comply with PAYE obligations, a UK host employer must keep sufficient records to demonstrate that PAYE has been operated correctly or that PAYE was not required to be operated. Find out more about keeping records.
The definition of ‘host employer’ for ERS purposes is based on Section 689 ITEPA 2003 (employees of non-UK employers).
The UK host employer would also maintain details of any ERS reportable events. Therefore, STBVs should provide to the UK host employer details of ERS data, such as awards of shares made to them. The UK host employer is generally responsible for filing the ERS end of year return.
However, the UK host employer will not have to report ERS data where an EP Appendix 4 arrangement is in place that covers the STBV, provided no UK Income Tax or National Insurance contributions would be due.
EP Appendix 4 arrangement
An EP Appendix 4 arrangement will be typically used by companies in the UK, with overseas companies in the same corporate group that send staff to the UK temporarily.
The arrangement permits a company in the UK who hosts STBVs not to deduct PAYE, because ultimately no UK Income Tax liability will arise. For example, if there is a double taxation agreement between the UK and the STBV’s usual country of residence.
An EP Appendix 4 arrangement only applies to Income Tax. National Insurance contributions are not covered and should be assessed separately.
Under the arrangement:
- a double taxation agreement will be in place between the UK and the STBV’s home country
- the STBV is expected to stay in the UK for 183 days or less (in a 12-month period)
- the STBV is in the UK to work for a UK company or the UK branch of an overseas company
- the STBV may be legally employed by the company in the UK but economically employed by the separate overseas entity — so the overseas company will maintain control over the remit of the STBV’s duties and bear the STBV’s remuneration costs
UK National Insurance contributions for STBVs
The company in the UK must assess whether an STBV is liable for Class 1 National Insurance contributions. National Insurance contributions are chargeable on shares that are readily convertible assets at the time they are acquired. The company in the UK must use PAYE to deduct any UK Income Tax and National Insurance contributions.
STBVs may not be liable to pay National Insurance contributions if they are either:
- a detached or multi-state worker covered by a social security agreement
- coming to work in the UK from another country — they are not liable for the first 52 weeks if they are not ordinarily resident in the UK, and normally work outside the UK for an employer whose place of business is outside the UK
ERS reporting requirements for STBVs
A company that grants share options or awards shares to employees including STBVs must submit an ERS end of year return to HMRC. It will be the company in the UK (the host employer) that is generally responsible for filing the return.
However, regarding non-tax advantaged share schemes and awards, HMRC no longer requires companies to report ERS data if both the following apply to the employee:
- they are an STBV covered by an EP Appendix 4 arrangement
- they would not be due to pay any UK Income Tax or National Insurance contributions
This applies for all previous, current and future tax years.
When an STBV might be liable to pay UK Income Tax, National Insurance contributions or both
A STBV can be liable to pay UK Income Tax, National Insurance contributions or both if situations such as the following examples apply:
- the conditions of the EP Appendix 4 arrangement are not met
- the conditions of the EP Appendix 4 arrangement are met but the double taxation agreement with that employee’s home country does not give full relief from UK Income Tax
- the STBV is given share options when UK resident, and later becomes non-UK resident before the options vest or are exercised
- the STBV is granted share options when liable to pay UK National Insurance contributions, and later that liability ceases before the options vest or are exercised
- the STBV is not covered by a social security agreement or exempt from paying National insurance contributions for the 52 weeks in the UK
In such circumstances, the UK employer must send an ERS end of year return, providing details of any ERS reportable event.
ERS reportable events include grants of options, exercises of options, awards of shares or restricted stock units.
If the employment related securities are readily convertible assets, the UK employer must use PAYE to deduct any UK Income Tax and Class 1 National Insurance contributions.
Securities are ‘readily convertible assets’ if they can be easily sold or converted into cash. More information can be found in the PAYE and National Insurance contributions section of the Employment Related Securities Manual (ERSM170030).
If the employment related securities are not readily convertible assets, UK Income Tax still applies, and the STBV must send a Self Assessment tax return.
An STBV can claim a full or partial refund of UK Income Tax if there is a double taxation agreement between the UK and their home country.
Submit an ERS return for STBVs under an EP Appendix 8 arrangement
An EP Appendix 8 arrangement helps employers meet PAYE obligations for employees who spend no more than 60 workdays in the UK and cannot be included under an EP Appendix 4 arrangement.
Under Appendix 8, PAYE can be reported and paid through a single annual Real Time Information (RTI) submission following the end of the relevant tax year.
ERS reportable events, such as options granted or awards of shares to individuals covered by an EP Appendix 8 arrangement, must be reported on the ERS end of year return.
Further guidance
Further guidance can be found in the Employment Related Securities Manual (ERSM140030) in the following sections:
- reporting requirements - ‘Other’ non-tax advantaged employment related securities (Previously Form 42)
- reporting requirements - Form 42: Acquisitions by employees who are not UK resident
Read more about Class 1 National Insurance contributions: Employment-Related Securities in the National Insurance Manual (NIM06800).