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HMRC internal manual

Employment Related Securities Manual

Securities acquired for less than market value: LTIPs or RSUs awarded abroad (up to 5 April 2015)


Deferred share awards made overseas may be described as Restricted Stock Units (RSUs) or be a feature of Long Term Incentive Plans (LTIPs) or other arrangements. Normally they are structured as a promise to give an employee shares at sometime in the future if certain conditions are satisfied. Such a promise may be made in respect of an employment whilst the employee is not resident and not ordinarily resident in the UK.

If the employee subsequently becomes resident in the UK, or undertakes duties in the UK which give rise to general earnings within Chapter 5 Part 2 ITEPA 2003, the shares may vest or be acquired whilst the employee is within the scope of UK tax. The LTIP or RSU may or may not be money’s worth on award - see ERSM70410) and this affects whether there is an Income Tax liability as discussed below.

LTIP constituting money’s worth on award

See ERSM70410.

LTIP not constituting money’s worth on award

LTIP awards which:

  • do not constitute money’s worth on award, and
  • vest and/or are acquired whilst the employee is within the charge to general earnings in Chapters 4 or 5 Part 2 ITEPA 2003,

will be chargeable either as money’s worth under ITEPA03/S62 or alternatively, if not money’s worth, under Chapter 3C.

If in doubt about whether something is money’s worth (that is, realisable for cash) please refer to Employment Income Technical Adviser.

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