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HMRC internal manual

Employment Income Manual

Employment income provided through third parties: exclusions: earmarking for share schemes: how Sections 554J and 554K are related

Sections 554J and 554K ITEPA 2003

The exclusions under Section 554J are not available unless there is a specified vesting date which is at most ten years after the award date. See EIM45355.

So, Section 554J cannot cover cases where there is no fixed time limit for the award to vest because the vesting is linked to exit events.

Section 554K caters for such cases. Sections 554J and 554K impose similar conditions. But Section 554K requires the vesting to be linked to certain exit events taking place, rather than within a ten year time limit.

These exit events include (to summarise) a sale, flotation or winding up of the company in which the shares are held.

On Section 554J, see EIM45355 onwards.

On Section 554K, see EIM45385 onwards.