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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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International from 6 April 2015: ascertaining chargeable and unchargeable foreign securities income - from 6 April 2015: examples: example 5 - non-resident year

Agnetha is employed by a Swedish bank in London. In the tax years 2013/14 and 2015/16 she devotes 75% and 60% respectively of her total working time to this employment. She has a separate employment with an affiliate of the bank which requires her to spend the remainder of her working time at that bank’s offices in Stockholm and in the intervening year, 2014/15 Agnetha works full-time for the Stockholm employer in Sweden and is not resident in the UK. The two employers are associated, applying the rules in ITEPA03/S24(5) & (6). She does work of comparable value in both employments and ITEPA03/S24A does not apply. (ERSM162620)

On 6/4/13 she is granted a share option by her Stockholm employer. She exercises the option when it vests on 5/4/16 realising a gain of £3,000, which counts as employment income for 2015/16 under Chapter 5 of Part 7 of ITEPA 2003.

Agnetha is resident but not domiciled in the UK and does not meet the requirement of ITEPA03/S26A in 2013/14 and in 2015/16 and claims the remittance basis of taxation under ITA07/S809B for those years. In 2014/15 she is not UK-resident.

All the conditions in ITEPA03/S41H(4) are met for 2013/14 and 2015/16. For 2014/15 ITEPA03/S41H(8)(a) applies, so that her securities income for that year is unchargeable foreign securities income.

Her total option gain of £3,000 will be taxed as follows

  UK arising basis Chargeable foreign securities income Unchargeable foreign securities income
2013/14 750 250  
2014/15 NIL NIL 1,000
2015/16 600 400  
Totals £1,350 £650 £1,000

For an explanation of the requirement of section 26A, see ERSM162677.