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HMRC internal manual

Employment Related Securities Manual

Employment-related securities and options: what are not securities?

The legislation in ITEPA03/S420 (5) excludes from the definition of “securities” the following:


Cheques and other bills of exchange, bankers’ drafts and letters of credit (other than bills of exchange accepted by a banker).

Cash and account balances

Money and statements showing balances on a current, deposit or savings account.


Leases and other dispositions of property and, in respect of Scotland, heritable securities.


Rights under contracts of insurance (within the meaning of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001) in relation to periods before 2 December 2004. See also ERSM20130 on other contracts of insurance excluded from the definition of ‘security’.

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Securities options

As from 2 December 2004, securities options are excluded as long as they were not acquired as part of arrangements the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions (ITEPA03/S420 (8)). So if a securities option is acquired as part of an avoidance scheme, (or, if it was acquired before 2 December 2004 and something is done on or after that date as part of the arrangements under which it was made available) it is subject to taxation as a security, not as a securities option - see ERSM20205.

The code of taxation for non-avoidance securities options is in Chapter 5 - see ERSM110000.

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Power to amend

HMRC has a power to amend by statutory instrument the definition of what are and what are not “securities”. This was most recently used in 2007 when certain alternative finance arrangements were added to the existing definition.