Consultation response on national insurance on securities for internationally mobile employees

10 February 2015

This consultation relates specifically to liability for earnings-related National Insurance Contributions from employment related securities income earned by internationally mobile employees.

The Government has published their response to the Internationally Mobile Employees (IMEs) and Employment-Related Securities (ERS) consultation.


Income tax and NICs are generally due where an employer awards ERS to employees. The tax rules in this area are designed to ensure that employment income paid in the form of ERS is subject to income tax and NICs where appropriate.

In its final report on unapproved employee share schemes, the OTS recommended changes to the taxation of shares and share options awarded to IMEs. The Government introduced legislation in Finance Act 2014 to give effect to those recommendations in relation to income tax and corporation tax relief.

The OTS also referred to work done by HMRC and external stakeholders which had identified the desirability of moving to apportionment for NICs to align as closely as possible with tax treatment, but acknowledged this had to remain subject to international social security treaty requirements.

The Finance Act 2014 changes to the income tax rules for IMEs mean that, with effect from 6 April 2015, ERS income will be apportioned on a time basis: the part which relates to UK duties will be subject to income tax. However, complete alignment of the rules in this area between tax and NICs creates the risk of a NICs double-charge (for example, an employee chargeable for income tax on ERS in the UK may still be within a foreign social security scheme and not liable for UK NICs).

The proposed NICs measure is designed to ensure that any ERS income which is attributable to days when the individual was not in the UK social security system will be disregarded and not subject to a NICs liability. This introduces greater simplicity, and produces the best fit with international social security treaties.

The Government will continue to monitor the impacts of the changes following introduction of the legislation.

The CIPP training department run a one day course filled with detailed information regarding International payroll. Visit the CIPP website for dates and locations.