Employment-related securities

Various income tax and National Insurance contributions (NICs) charges can arise for an employee or director in relation to the acquisition, ownership or disposal of employment-related securities. Associated PAYE and NICs obligations can also arise for the employing company.

What is an employment-related security?

A security (which includes shares, debt, derivatives and interests in investment partnerships) will be an employment-related security where the right or opportunity to acquire the securities (or interest in securities) is:

•
available by reason of an employment of the person acquiring the securities (or interest) or any other person, or
•
made available by a person's employer (or a person connected with a person's employer) (the deeming provision) unless such right or opportunity is made available:
1. ◦
  by an individual, and
2. ◦
  in the normal course of the domestic, family or personal relationships of that individual

For these purposes, employment includes a former, current and prospective employment.

The rules on employment-related securities apply very broadly because of the deeming provision. It means that the employment-related securities rules must be considered whenever shares are acquired in the employing company or a connected company.

For

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Tax News

FTT holds that sales of occupation income provisions applied to capital sum received by the taxpayer (Rupert Grint v HMRC)

Tax analysis: In Rupert Grint v HMRC, the First-tier Tax Tribunal (FTT) found that the sales of occupation income anti-avoidance rules applied to a capital sum received by the taxpayer on the incorporation of his business. The anti-avoidance provisions were engaged as, although there were commercial reasons for the incorporation, one of the main objects of the arrangements was the avoidance or a reduction in income tax. The FTT also held that the closure notice was validly issued despite referring to the wrong legislative provision.

FTT holds discrimination settlement payment not taxable (L v HMRC)

Tax analysis: In L v HMRC, the First-tier Tax Tribunal (FTT) held that the part of a settlement payment which related to a discrimination claim fell outside the scope of income tax. This was on the basis that the payment was not ‘from employment’; instead it was made because the discrimination had deprived the former employee of the opportunity to perform her full role, causing financial loss.

FTT allows taxpayer’s R&D appeal (Stage One Creative Services Ltd v HMRC)

Tax analysis: In Stage One Creative Services Ltd v HMRC, the First-tier Tax Tribunal (FTT) allowed the taxpayer’s appeal, holding that it was entitled to research and development (R&D) relief under the pre-1 April 2024 regime for small and medium-sized enterprises (SMEs).

UT considers taxpayer’s application for permanent anonymity and third party disclosure request (HMRC v The Taxpayer and Others)

Tax analysis: The Upper Tribunal (UT) rejected a taxpayer’s application for permanent anonymity, following the taxpayer's decision to withdraw their substantive appeal with the First-tier Tax Tribunal (FTT). The UT further granted a third party limited access to the FTT’s previous case management decision. The UT’s decision emphasises the importance placed on open justice and highlights the court and tribunals’ reluctance to permit anonymity in litigation. Written by Helen McGhee, Partner, and Megan Durnford, Associate, at Joseph Hage Aaronson LLP.