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HMRC internal manual

Employment Related Securities Manual


Approved schemes

The table in ERSM170500 sets out the main situations in which PAYE and NICs apply. The most important exception is that shares acquired under a tax advantaged share or option scheme, or an Enterprise Management Incentive (EMI) option, are not within the scope of PAYE and NICs when, as often happens, Income Tax charges arise on the exercise of options. It is important to remember however that the exception only applies where the shares are actually acquired in accordance with the tax advantaged scheme. The exception does not apply, when as sometimes happens shares are acquired outside the terms of the tax advantaged scheme.

However, prior to 9 April 2003 PAYE and NICs were not exigible on CSOP options exercised early (before the end of the three year qualification period).

Advice on the circumstances in which such shares have been acquired can be obtained from the Employee Shares & Securities Unit (see ERSM10040).