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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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Ascertaining Foreign Securities Income (FSI) - up to 5 April 2015: examples: example 1 - non-domiciled employee with overseas employment

In 2009/10 John is R/OR but not domiciled in the UK. On 1 January 2010 he begins work for a French employer in Calais whilst remaining resident in the UK for tax purposes. From that date he works solely in France and performs no duties in the UK. He is awarded a share option on 1 January 2010 which vests on 31 March 2010. He exercises his option in 2010/11, when he is working for the same employer, but now with some UK duties involved, realising a gain. He claims the remittance basis of taxation under section ITA07/S809B for 2009/10.

All the conditions in ITEPA03/S41C(4) are met for 2009/10.

The relevant period for the share option (1/1/10 to 31/3/10) falls wholly within 2009/10.

As a result, the whole of the share option gain which is employment income for 2010/11 is treated as FSI, and will be taxed only if remitted to the UK. The fact that John’s earnings from the employment for 2010/11 would not be eligible for the remittance basis does not affect the calculation of the foreign securities income, which is made in respect of 2009/10.

For the application of this and the following examples to periods from 6 April 2013, see ERSM160873.