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HMRC internal manual

Employment Related Securities Manual

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HM Revenue & Customs
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Ascertaining Foreign Securities Income (FSI) - up to 5 April 2015: daily accrual

The securities income is to be treated as accruing equally on each day of the relevant period (ITEPA03/S41C(2)).

This should not be read as a requirement to compute the apportionment of securities income between what is foreign and what is not on the basis of the circumstances of every day during the relevant period. Rather, because the apportionment rules of section 41C treat each tax year within the relevant period separately, the concept of daily accrual means that securities income is regarded as relating in equal proportions to each year or part of a year within the relevant period.

The statute at ITEPA03/S41C and S41D requires that for both categories of employees who are eligible for the remittance basis - those who are not ordinarily resident in the UK (NOR) and those who are ordinarily resident but not domiciled in the UK (from 6 April 2013, those not domiciled in the UK who meet the requirements of section 26A and those not domiciled in the UK who do not meet the requirements of section 26A) - the securities income will be apportioned between what is foreign and what is not. (There are transitional arrangements - see ERSM160200.)

For non-domiciled employees (from 6 April 2013: for employees not domiciled in the UK who do not meet the requirements of section 26A) the apportionment will be made in accordance with ITEPA03/S41C(3) and (4) and S41D. See the guidance at ERSM160820 et seq. For NOR employees (from 6 April 2013: for employees not domiciled in the UK who meet the requirements of section 26A) the apportionment is governed by ITEPA03/41C(5) and (6). See the guidance at ERSM160840 et seq.

For both categories of employees, the way that the apportionment is made is not set down in statute in any more detail than is contained in sections 41C and 41D. HMRC would expect that a split based on overseas and UK workdays will be the most commonly used method of arriving at a just and reasonable apportionment, but other methods will be acceptable if they achieve a just and reasonable result. Most of the examples that follow use the workdays method, assuming 48 5-day weeks in a year, allowing for 4 weeks’ holiday. If workdays are being used, and the facts of any particular case require it, a different number of workdays may be used, as appropriate.