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HMRC internal manual

Employment Related Securities Manual

International: impact of Finance Act 2008 residence and domicile rules on employment-related securities & options - up to 5 April 2015

With the removal of ITEPA03/S21 and the consequential changes to Sections 421E(1) and 474(1) of the same Act by Finance Act 2008 from 6 April 2008, Chapters 2, 3, 4 and 5 of Part 7 ITEPA now apply if the individual concerned is UK resident at the time of acquisition regardless of whether or not he or she is ordinarily resident (or UK domiciled).

The extension of the application of the aforementioned Chapters of Part 7 to employees who, when they acquire securities or options, are not ordinarily resident, demanded consideration of a means of recognising that some of the employment income that would be charged by Part 7 might relate to foreign duties. It was also felt appropriate that existing, informal recognition in this guidance of the remittance basis for Part 7 income from foreign duties for foreign employers by “non-domiciles” should be recognised in statute. As a result, from 6 April 2008, new Chapter 5A of Part 2 of ITEPA 2003 applies the remittance basis to such employment income.

The guidance in this section is mainly concerned with the rules affecting internationally mobile employees (IMEs) acquiring options or securities on or after 6 April 2008. The guidance at ERSM161300 relates to the effect of tax treaties on UK tax treatment of employees acquiring options or securities both before and after 6 April 2008.

For detailed discussion of the date of commencement of the new rules, see ERSM160400