Employment-related securities: internationally mobile employees

By Tolley in association with Caroline Harwood of Burges Salmon LLP

The following Employment Tax guidance note by Tolley in association with Caroline Harwood of Burges Salmon LLP provides comprehensive and up to date tax information covering:

  • Employment-related securities: internationally mobile employees
  • General principles
  • Taxation
  • Double tax
  • National Insurance (NI)
  • Double charges to NIC

General principles

Where a UK resident employee acquires or is granted the right to acquire employment-related securities (ERS), he is subject to certain UK tax and regulatory requirements which apply no matter where the issuer of those ERS or his employer is located.

For tax, the basic principle is that the employee is charged to income tax on the value he receives. The situation becomes more complex where that employee is internationally mobile and the relevant rules are outlined below.

Where an event occurs in connection with the acquisition, holding or disposal of ERS, and is chargeable to UK income tax, there is a requirement to report details to HMRC. HMRC can require any ‘responsible person’ (as defined in ITEPA 2003, s 421L(3)) to report. Broadly a responsible person may be the employer, the host employer, or the issuer of the securities (special provisions apply to continental shelf workers). In practice, typically the employer or issuer of the securities (eg the holding company of a group) will make the report. For details of the new online ERS reporting requirements, see the Annual returns guidance note.

Chargeable events in relation to ERS may also give rise to a liability to National Insurance contributions (NIC). Although the NIC rules are quite different to the income tax rules (see the ‘National Insurance’ section below), both kinds of liability should always be considered.


The income tax treatment of shares and similar securities acquired by reason of employment (ERS) where the employee in question is not UK resident for tax purposes at all relevant times, was historically governed by ITEPA 2003, ss 41E, 474. The interaction of this legislation, the rules relating to residence and domicile, and the application of international tax treaties led to a great deal of complexity.

The taxation of ERS in the hands of internationally mobile employees

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