The relevant period - up to 5 April 2015: Chapter 2 examples
Example 1: single chargeable event
On 1 July 2008 Alex is awarded securities by his employer which will be forfeited if he leaves his employment on or before 30 June 2010. Alex is R/NOR throughout this period and splits his working time between the UK and the USA. He remains in the employment and the forfeiture condition lifts on 30 June 2010, giving rise to a Chapter 2 chargeable event. He claims the remittance basis under ITA07/S809B for each of the three tax years - 2008/09, 2009/10 and 2010/11 - concerned.
The relevant period runs from 1 July 2008 to 30 June 2010.
Example 2: multiple chargeable events
The facts are as in Example 1, except that in addition to the forfeiture condition, Alex is not allowed to sell his shares for 5 years from the date of acquisition. This condition lifts on 30 June 2013, giving rise to a second chargeable event under Chapter 2. For 2011/12 and later years, Alex is R/OR (and UK-domiciled).
First chargeable event: as before, the relevant period runs from 1 July 2008 to 30 June 2010.
Second chargeable event: the relevant period runs from 1 July 2008 to 30 June 2013.
The fact that Alex is not entitled to the remittance basis for 2011/12 and later years does not affect the relevant period. The remittance basis applies for at least part of the relevant period, so the rules of Chapter 5A will apply.
Example 3: elections to ignore the effect of restrictions on market value at acquisition
The facts are as in Example 1, except that Alex and his employer make an election under ITEPA03/S431(1) for ss425 to 430 not to apply to his acquisition and for the market value of the forfeitable shares to be calculated as if they were not forfeitable.
As a result, Alex is treated as receiving earnings in the form of the money’s worth of the shares, in accordance with ITEPA03/S62. As the acquisition gives rise to general earnings rather than specific employment income by virtue of Chapter 2 of Part 7 of ITEPA03, it follows that the rules of Chapter 5A of Part 2 of ITEPA03: for remittance basis on employment income arising from the provisions of Part 7, do not apply. Instead, the residence rules for general earnings in Chapters 4 and 5 of Part 2 of ITEPA03 would apply and the year(s) that the earnings are for will be decided in accordance with those rules. (See the Employment Income Manual, EIM40002, EIM42201 and EIM42202)