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HMRC internal manual

Employment Related Securities Manual

Interaction of UK law and treaties - from 6 April 2015: chapter 5B and time apportionment - example 6

Duties in non-treaty countries

Sylvia is resident and domiciled in the UK when an option is granted, on 6 April 2013. On 6 April 2015 she leaves the UK and begins to work (for the same employer) and reside in Dubai. The option vests at the end of Year 3 on 5 April 2016 and is exercised at that time. For the purposes of Chapter 5B the relevant period is the three years to 5 April 2016.

In 2015/16 Sylvia is not resident in the UK and all of her duties are performed in Dubai.

ITEPA03/S41F(3) produces a UK tax charge as follows:

Securities income 12,000
ITEPA03/S41H(8) 240/720 x 12,000 gives unchargeable foreign securities income of 4,000
Taxable specific income under S41F(3) 8,000

In this example, the fact that there is no tax treaty between the UK and Dubai, means that there is no treaty time apportionment. However, the rules of Chapter 5B mean that the UK charge is on income relating to UK duties only.