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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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Securities acquired for less than market value: UK duties before permanent arrival in the UK (up to 5 April 2015)


Where the employee is partly within the UK tax net before becoming resident in the UK, by performing UK duties, then part of the gain relating to the non-UK work before arrival may be excluded from the computation.


Hannah Matthews is resident and employed in the USA and is granted a legal option over shares with a three year vesting period. In each of years 1 and 2 she spends 3 months working in the UK and for year 3 moves to the UK to work here full-time. She exercises her option at the end of year 3 making a gain of £5,000.

The gain of £5,000 will create a notional loan, but the loan will be reduced by the non-UK working periods:

Gain £5,000
Year 1 9/12 of one third (£1,250)
Year 2 9/12 of one third (£1,250)
Notional loan £2,500

For guidance on the effect of residence on charges under Part 7 generally, including Chapter 3C, from 6 April 2015 onwards, see ERSM162000.