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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Employment income provided through third persons: relevant steps: Section 554B: earmarking etc of sum of money or asset: employee share scheme: shares from various sources

Section 554B ITEPA 2003

Example: shares from various sources

B plc arranges to award shares to its employees on the basis that, on vesting, the shares may be sourced in any of four ways:

  • newly issued shares,
  • treasury shares,
  • shares held by a trust, or
  • shares bought in the market.

The final decision about the sourcing of the shares may not be made until shortly before vesting, and is driven by a variety of commercial and financial factors. However, the facts show that B plc can genuinely access the shares from any of or a mixture of these sources. In addition, there is no suggestion that the trust is holding specific amounts or funds of shares for particular employees.

On the facts, these possibilities remain open during the period between grant and vesting of the award there is genuinely a variety of sources from which the award can be satisfied.

Accordingly, in a case such as this, no relevant step is taken within Section 554B(1)(a) or (b).