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HMRC internal manual

National Insurance Manual

NICs avoidance: treating payments as earnings: income from events after acquisition of shares or interests in shares

Section 50(2) of the Social Security Act 1998

Section 4(6) of the Social Security Contributions and Benefits Act 1992

With effect from 6 April 1999 the SSCBA 1992 includes the power to make regulations to treat certain amounts of income chargeable to income tax in respect of

  • an acquisition of shares, or
  • an interest in shares

as remuneration from employment.

For example, an employer may give an employee shares which he cannot sell or do anything with until certain conditions are met. Such conditions or restrictions can affect the value of those shares so the amount on which NICs may be due, when the shares are first acquired, may be very low. But when those restrictions are lifted or met, the value of those shares may be considerably higher.

Guidance about NICs and income tax treatment of such gains is in the Employment Related Securities Manual, see ERSM30000 and NIM06827.