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HMRC internal manual

Employment Related Securities Manual

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HM Revenue & Customs
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International from 6 April 2015: Chapter 5B - taxable specific income

Paragraph 5 of Schedule 9 to Finance Act 2014 introduces new Chapter 5B of Part 2 ITEPA 2003 to deal with the effect of residence on the taxation of employment-related securities of internationally mobile employees.

If an amount counts as employment income under Chapters 2 to 5 of Part 7 ITEPA, and one or more of the ‘international mobility conditions’ are met, then ITEPA03/S41F will apply.

International mobility conditions

These are:

  1. that any part of the relevant period (see ERSM162500 for guidance on relevant periods) is within a tax year for which the remittance basis applies to the individual;
  2. that any part of the relevant period is within a tax year for which the individual is not UK resident;
  3. that any part of the relevant period is within the overseas part of a tax year that is a split year for an individual.

(For guidance on split years see HMRC’s Guidance Note on the Statutory Residence Test -RDR3 (website).)

Foreign securities income

Subsection (3) provides that, of the whole amount which counts as employment income, that part which relates to the UK is taxable specific income.

It achieves this by use of a formula:

SI - FSI

where

SI is the amount of the securities income, and

FSI is the amount of the securities income that is ‘foreign’

Foreign securities income consists of ‘chargeable foreign securities income’ and ‘unchargeable foreign securities income’. In addition to amounts of taxable specific income produced by the formula above, any chargeable foreign securities income that is remitted to the UK in a year is taxable specific income for that year.

For guidance on the application of the remittance basis to securities income from 6 April 2015, see ERSM162900