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HMRC internal manual

Employment Related Securities Manual

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HM Revenue & Customs
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Post Acquisition Benefits from Securities

Basic charge on benefits

Section 62 in Chapter 1 Part 3 ITEPA deals with the basic money’s worth charge (see ERSM20500), while Chapters 2, 3 and 3A - 3D in Part 7 deal with specific types of securities, or value received from securities. Any benefit not caught by these sections will potentially fall into Chapter 4 as a “post acquisition benefit”.

Although the wording of Chapter 4 did not alter substantially from 16 April 2003, the context is radically different from that before 16 April 2003:

  • Chapter 1 now contains deeming provisions which apply to Chapters 2-4A. A right or opportunity to acquire securities or an interest in securities made available by a person’s employer is regarded as available by reason of an employment of that person, unless it is in the course of a personal relationship (see ERSM20220). The securities acquired are employment-related securities;
  • Chapter 4 applies if an associated person receives a benefit in connection with such an employment-related security (see ERSM90030 for an overview of these terms), subject to 2 exclusions:

 

  • Where a benefit is otherwise chargeable to income tax unless, on or after 2nd December 2004, avoidance is involved (see ERSM90200);
  • In certain control situations (see ERSM90230).

If neither of these exclusions applies then there will be a potential charge under Chapter 4.