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HMRC internal manual

Employment Related Securities Manual

From
HM Revenue & Customs
Updated
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PAYE & NICs

Gains from securities options

The charges imposed by Chapter 5 Part 7 ITEPA 2003 (securities options) are subject to PAYE in accordance with ITEPA03/S700, as amended by FA03/SCH22.

Where there is a charge (see ERSM110500) on:

  • an acquisition of securities pursuant to the employment-related securities option under ITEPA03/S477 (3)(a),
  • the assignment for consideration of the employment-related securities option under ITEPA03/S477 (3)(b),
  • the release for consideration of the employment-related securities option under ITEPA03/S477 (3)(b), or
  • the receipt of a benefit in connection with the employment-related securities option under ITEPA03/S477 (3)(c),

the employment income of the employee will be subject to PAYE if the employee has:

  • acquired securities which are readily convertible assets (RCA) (see ERSM170020),
  • received cash, or
  • received consideration or benefit in the form of a RCA (see ERSM170020).

Where only part of the employment income is represented by cash or RCA, PAYE is operated on the part that is regarded as RCA.