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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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Post Acquisition Benefits from Securities

Exclusions: avoidance: interaction with Chapter 3B

Arrangements that are designed to incentivise employees by delivering post-acquisition benefits will not normally be subject to the anti-avoidance provisions of Chapter 3B (securities with artificially enhanced market value) unless they are designed to avoid paying the right amount of tax and NICs at the right time.

Where the avoidance of tax and/or NICs is the main purpose, or one of the main purposes, of the arrangements the anti-avoidance provisions of Chapter 3B may apply. See Example 3 in ERSM60030 where the rise in share value after a dividend is voted or decided upon can lead to a charge. The corresponding fall in value after a dividend is paid is ignored.

Where the benefit passed to the employee is taxed through Chapter 3B, HMRC would not seek to tax the same benefit under a Chapter 4 charge on the dividend.