The UK’s HMRC has recently clarified its position on employment-related securities (ERS) reporting for short‑term business visitors (STBVs), initially confirming that ERS obligations were not mitigated by an EP Appendix 4 Short‑Term Business Visitor Agreement (STBVA). However, HMRC has now updated its ERS manual, reversing that position and removing certain reporting obligations.
HMRC’s revised guidance states:
“Where an employee is a short term business visitor who is covered by an EP Appendix 4 arrangement, there is now no longer a requirement for companies to report non-tax advantaged ERS data for these employees provided no UK Income Tax and National Insurance Contributions would be due. This applies for all previous and future tax years. The reporting obligation remains where UK Income Tax and National Insurance Contributions would be due as a result of the application of Chapter 5B of Part 2 ITEPA 2003.”
Under the UK’s pay-as-you-earn (PAYE) regime, employers must withhold income tax and national insurance contributions for employees working in the UK — even if those employees are employed by a foreign parent or affiliate. This obligation applies from the first UK workday, with no de minimis threshold. STBVAs (EP Appendix 4 agreements) allow employers to relax PAYE withholding when the visiting employee is resident in a country with which the UK has entered into a double taxation agreement (DTA) and would not be liable to UK tax after applying that treaty (and meeting other STBV criteria). Historically, however, this relaxation of PAYE rules did not explicitly extend to ERS reporting.
Employers were therefore expected to:
HMRC’s updated ERSM140030 guidance now confirms that no ERS reporting is required for STBVs covered by an Appendix 4 agreement when no UK income tax or NICs would arise. This change covers all previous and future tax years. However, when a UK tax liability would arise due to the operation of Chapter 5B ITEPA 2003 (certain internationally mobile employee rules) ERS reporting requirements continue to apply.
HMRC’s latest update significantly eases the compliance burden for Appendix 4 STBVs by removing the requirement to report non‑tax‑advantaged ERS events when no UK income tax or NICs arise. Employers should continue to monitor travel and track STBV information and ERS awards to identify the (potentially) limited cases in which reporting is still required.
Dan Lambert
BDO in United Kingdom
HMRC’s revised guidance states:
“Where an employee is a short term business visitor who is covered by an EP Appendix 4 arrangement, there is now no longer a requirement for companies to report non-tax advantaged ERS data for these employees provided no UK Income Tax and National Insurance Contributions would be due. This applies for all previous and future tax years. The reporting obligation remains where UK Income Tax and National Insurance Contributions would be due as a result of the application of Chapter 5B of Part 2 ITEPA 2003.”
Background
Under the UK’s pay-as-you-earn (PAYE) regime, employers must withhold income tax and national insurance contributions for employees working in the UK — even if those employees are employed by a foreign parent or affiliate. This obligation applies from the first UK workday, with no de minimis threshold. STBVAs (EP Appendix 4 agreements) allow employers to relax PAYE withholding when the visiting employee is resident in a country with which the UK has entered into a double taxation agreement (DTA) and would not be liable to UK tax after applying that treaty (and meeting other STBV criteria). Historically, however, this relaxation of PAYE rules did not explicitly extend to ERS reporting.HMRC’s Original Position (Now Withdrawn)
HMRC’s prior guidance, confirmed in October 2025, was that ERS reporting obligations were unaffected by an STBVA. This meant that even if PAYE did not apply under Appendix 4, and the employee was exempt from UK tax under a DTA, ERS events — including grants, awards, vestings, and exercises involving periods in which the employee worked in the UK -- still needed to be reported.Employers were therefore expected to:
- Determine whether the UK entity was a host employer;
- Track ERS awards for all STBVs from grant through exercise; and
- Report relevant events on the annual ERS return ("Other" non–tax advantaged section).
New Position: Reporting Obligation Removed (When No UK Income Tax/NIC Is Due)
HMRC’s updated ERSM140030 guidance now confirms that no ERS reporting is required for STBVs covered by an Appendix 4 agreement when no UK income tax or NICs would arise. This change covers all previous and future tax years. However, when a UK tax liability would arise due to the operation of Chapter 5B ITEPA 2003 (certain internationally mobile employee rules) ERS reporting requirements continue to apply.Practical Implications for Employers
Despite the relaxation, employers should continue to maintain effective STBV governance. Employers should:- Ensure that the employee falls under an STBVA and that the relevant treaty conditions eliminate UK tax liability.
- Assess whether UK income tax/NIC could arise. If any part of Chapter 5B applies – for example, if there are cross‑border ERS gains when UK‑workday attribution triggers a liability — ERS reporting must continue.
- Maintain control over STBV tracking. While reporting obligations are reduced, tracking UK business travel remains essential for determining Appendix 4 eligibility, assessing treaty relief, and supporting any future HMRC queries.
- Integrate travel and equity data. Although many ERS events will now be non-reportable, employers must still be able to identify cases where tax could arise.
BDO Insights
HMRC’s latest update significantly eases the compliance burden for Appendix 4 STBVs by removing the requirement to report non‑tax‑advantaged ERS events when no UK income tax or NICs arise. Employers should continue to monitor travel and track STBV information and ERS awards to identify the (potentially) limited cases in which reporting is still required.Dan Lambert
BDO in United Kingdom