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HMRC internal manual

Employment Related Securities Manual

Post Acquisition Benefits from Securities

Overview of Chapter 4

Persons liable to charge

The employee is liable where he or another associated person (see ERSM20250) receives the benefit – ITEPA03/S447 (1).

Residence rule

The Chapter 4 benefits charge only applies where the employee was resident and ordinarily resident in the year when the employment-related securities were first acquired- see ERSM20300.

Up to 1 December 2004, the benefit has to be through ownership of employment-related securities. From 2 December 2004 it has to be in connection with employment-related securities – see ERSM90040.

Nature of benefit

Benefit is not further defined and the scope of the charge is potentially wide. See ERSM90050.

Receipt of benefit

A liability to income tax arises on receipt of the benefit. What is meant by “receipt” will depend on the facts and circumstances of the benefit delivery, but generally we would look for the point at which the employee or associated person has realised or enjoyed, or is in a position to realise or enjoy, the benefit.

Year of charge

The tax year for which the taxable amount is charged as employment income of the employee (ITEPA03/S447 (2)) is the year, or years, in which the benefit is received– ITEPA03/S447 (3).

Amount of charge

The taxable amount is the amount or market value of the benefit – ITEPA03/S448. Market value is defined by reference to the rule in TCGA – see ERSM20400.