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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

HM Revenue & Customs
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Company Share Option Plan (CSOP): Taxation: Joint NIC elections and agreements

There is a facility whereby:

  • the employer and employee can agree or jointly elect for the employee to meet the employer’s liability to pay secondary NICs on share option gains, and
  • the employee can get a deduction equal to the amount of NICs transferred (as elected) when working out the amount chargeable to income tax. A deduction is not allowed when working out the charge to NICs.


From 9/04/2003 making exercise conditional on the signing of an election or agreement became acceptable. The main concern from the perspective of a Schedule 4 CSOP is that the signing of an election can only be a condition of exercise and not a condition for the grant or allotment. If the scheme rules make such a provision then it is also acceptable for the definition of “tax liability” (or similar terms used in scheme rules) to include secondary NIC in that definition for the purposes of the withholding clause (ETASSUM48260). More detailed guidance in respect of NICs elections and agreements can be found at ERSM170750.