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HMRC internal manual

Employment Related Securities Manual

Restricted securities: relief for NICs elections and agreements

When an employee acquires shares subject to a restriction, the employer may face a future charge to employers’ NICs, but will not necessarily have any control over the timing of the charge and will not be able to predict the future amount.

This can cause accounting difficulties, as the employer will need to provide for the future liability.

To cater for this, it is possible for the employer to pass the responsibility for the employers’ NICs on to the employee by a joint election or agreement - ITEPA03/S428A.

Where this happens, relief for the NI contributions met by the employee is given by a deduction from the amount otherwise chargeable as employment income under Chapter 2 for the purposes of computing the tax liability only - the deduction does not affect the amount to be taken into account for NICs.