The following Tax guidance note provides comprehensive and up to date legal information covering:
Pay as you earn (PAYE) is the mechanism by which income tax (and National Insurance contributions (NICs) and certain other statutory deductions) must be withheld and accounted for to HMRC by employers (and other payers) in relation to certain payments of:
pension income, and
social security income (together, PAYE income)
See further Practice Note: Scope of the PAYE system.
PAYE income includes cash payments made to employees or directors (eg salaries, bonuses and termination payments). Non-cash payments are generally excluded from the operation of PAYE but a key exception to this is payments in the form of (or deemed to be in the form of) readily convertible assets.
In the context of employment-related securities, whether or not PAYE obligations arise is dependent largely, but not entirely, on the employment-related securities in question being readily convertible assets. For full details on the meaning of readily convertible assets, see Practice Note: PAYE—readily convertible assets, intermediaries and jurisdictional scope.
An important rule in this context is that all securities are currently deemed to be readily convertible assets (whether or not they would otherwise be so) unless they are shares that are corporation tax deductible.
Even if the employment-related securities are not (and are not deemed to be) readily convertible assets, PAYE obligations can still arise in the case of certain of the specific employment-related
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