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HMRC internal manual

Employment Related Securities Manual

International from 6 April 2015: impact of residence and domicile status on employment-related securities & options

General earnings

The acquisition of securities is normally charged as money’s worth within general earnings of the employee. Where this is the case, the effect of the residence and domicile status of the employee on the charge is precisely the same as with cash earnings. (See the Employment Income Manual, EIM40002, EIM42201 and EIM42207)

The effect of residence and domicile status on the taxation of general earnings is governed by Chapters 4 and 5 of Part 2 of ITEPA.

Specific employment income

Until 5 April 2015 Part 7 of ITEPA had its own residence rules, at ITEPA03/S421E for securities and in ITEPA03/S474 for securities options. Whether or not UK tax was chargeable in relation to employment-related securities might depend upon where an employee resided at the time the securities or securities options were awarded. This was regardless of where the work to earn that award was carried out, and whether it related to UK or non-UK duties.

The new rules introduced by Finance Act 2014, having effect from 6 April 2015, put the taxation of employment-related securities in the hands of internationally mobile employees on a simpler, more orderly and principled basis that is designed to achieve UK taxation of share-based income that relates to UK duties. They reflect OECD principles for taxing shares and share options and are broadly in line with the taxation of cash earnings.