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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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International from 6 April 2015: the relevant period - from 6 April 2015: securities disposed of for more than market value

ITEPA03/S41G(7)(a) says that where there is an amount which counts as employment income by virtue of Chapter 3D (securities disposed of for more than market value) the relevant period is the tax year in which the chargeable event occurs; that is, the tax year in which the disposal occurs.


Andrew is awarded shares by his employer on the basis that he can sell the shares back at any time for the same price he paid. The shares fall in value, and Andrew takes advantage of this “stop loss” arrangement, selling the shares back for more than they are now worth.

The relevant period is the tax year in which the disposal occurs. Andrew is UK-resident and meets the requirement of ITEPA03/S26A (ERSM162615) for that year.

As with examples of Chapter 3C charges (see ERSM162550), there may be examples of charges under Chapter 3D that can be linked to “earnings periods” that are different from the statutorily defined relevant period. A remuneration package involving the award of forfeitable shares might include a guaranteed “buyback” price at above market value at the time that the shares cease to be forfeitable. In those circumstances the market value of the shares at the time they ceased to be forfeitable would form the basis of a charge under Chapter 2 and the excess of the consideration received over the market value would be subject to a Chapter 3D charge. Here, it would seem reasonable to regard the period over which the Chapter 3D income was earned as identical to the relevant period for the Chapter 2 charge. Again, the just and reasonable override would operate to recognise this. (See ERSM162700)