HMRC has updated its guidance on employment-related securities reporting. This has clarified the rules for short-term business visitors.

PAYE for short-term business visitors

Short-term business visitors are employees of overseas companies who work temporarily in the UK to benefit a UK employer. This normally involves international groups of companies and can have tax implications.

In many cases, the UK employer can apply to be exempt from deducting PAYE from these individuals’ pay (called an Appendix 4). This arrangement can work if:

• The employee is resident in a country with a double taxation agreement (DTA) with the UK.
• They spend no more than 183 days in the UK in any 12-month period.
• Their pay is not ultimately borne by a UK entity.

If these conditions aren’t met, PAYE may still be due. Employers must keep accurate records of the employee’s UK work days and report these annually to HMRC.

Do the same rules apply to employment-related securities reporting?

No, we can’t expect the same relaxations for employment-related securities (ERS) reporting – HMRC has recently confirmed this.

Under ERS rules, businesses must submit returns to HMRC by 6 July following the end of the tax year. These should report most transactions in shares, options or other forms of security (eg loan notes, carried interest) involving employees and directors, including non-executive directors and UK participants of overseas plans.

This includes HMRC tax advantaged share plans such as:

• Enterprise Management Incentive
• Company Share Option Plan
• Save As You Earn
• Share Incentive Plan
• Non-tax advantaged arrangements.

Bear in mind that this isn’t an exhaustive list. Reportable events can, and often do, extend to transactions outside formal share plans.

What steps do employers need to take?

From FY2025/26 onwards, employers will need to consider short-term business visitors when preparing their ERS report.

They may need to include any employee receiving employment-related securities who has worked in the UK during the period from grant to vest, even if they only worked in the UK for one day.

Be sure to take the following precautions:

• Keep more details for each visit, noting if the individual’s work was for the benefit of the UK company (making the business a host employer).
• Where the individual is part of an overseas share plan, the plan will need reviewing to determine when there are reportable events under UK rules. These may not be the same events that are reportable overseas.
• Tracking should be considered for multiple years, not just the tax years when the individual worked in the UK or the reportable event occurred.

Employers are likely to face a higher administrative burden off the back of HMRC’s updated guidance, especially international groups with lots of employees travelling to the UK.

For more information and support with reporting, please get in touch with Ian Jones, Jo Webber or your usual RSM contact.

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