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HMRC internal manual

National Insurance Manual

Class 1 NICs: Securities: Securities disposed of for more than market value

Regulation 22(7) of the Social Security (Contributions) Regulations 2001

If employment-related securities are disposed of for a consideration that exceeds the market value of those securities, an income tax charge arises under Chapter 3D of the Income Tax (Earnings and Pensions) Act 2003. The amount treated as employment income is the amount of consideration given on the disposal less the market value of the securities and any expenses incurred in connection with the disposal.

The amount which counts as employment income is treated as earnings liable for Class 1 NICs provided section 698 ITEPA 2003 (PAYE: special charges on employment-related securities) applies.

ERSM80030 et seq explains more about securities disposed of for more than their market value.