Employment-related securities

Copyright © 2026 LexisNexis
Produced by a Tolley Personal Tax expert
Personal Tax
Guidance

Employment-related securities

Copyright © 2026 LexisNexis
Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
imgtext

Introduction

Employment-related securities (ERS) broadly means that the shares or securities in question are acquired in connection with an employment. The term ‘securities’ is widely defined in ITEPA 2003, s 420. ‘Securities’ includes shares, debentures, loan stock and financial instruments such as options, futures, contracts for differences and rights under contracts of insurance.

The ERS legislation is complex and it is not possible to cover all the areas comprehensively in this guidance note. This is an overview of the ERS legislation, focused on common scenarios, including potential pitfalls associated with ERS in a management buy-out (MBO). Links are included to Simon’s Taxes for further commentary, where appropriate.

The rules that govern the tax treatment of ERS are listed below:

Type of securityLegislationDetailed commentary
Restricted securitiesITEPA 2003, ss 422–432ERSM30000; Simon’s Taxes E4.507B–E4.507FA
Convertible securitiesITEPA 2003, ss 435–444ERSM40000; Simon’s Taxes E4.507G–E4.507L
Securities with artificially depressed market valueITEPA 2003, ss 446A–446JERSM50000; Simon’s Taxes E4.507M–E4.507QA
Securities with artificially enhanced market valueITEPA 2003, ss 446K–446PERSM60000; Simon’s Taxes E4.507R–E4.507TA
Securities

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
TAKE A FREE TRIAL NOW
Powered by Tolley+™
  • 18 Dec 2025 12:01

Home/ Tolley Tax Guidance/ Personal Tax / Additional information supplementary pages

Popular Articles

Class 1 v Class 1A

Class 1 v Class 1AClass 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met

Read more Read more
Corporation Tax

Corporate interest restriction ― administrative aspects

Corporate interest restriction ― administrative aspectsThe corporate interest restriction (CIR) regime has some specific administrative rules in addition to the general administrative requirements for corporation tax returns. This guidance note does not include commentary on provisions that are

14 Jul 2020 11:19 | Produced by Tolley Read more Read more
Corporation Tax

Entity classification

Entity classificationImplications of entity classificationIf a subsidiary is established, it is important to determine how it will be treated for UK tax purposes as this will determine the basis on which it is taxed. A subsidiary may either be transparent (like a partnership, where the individual

14 Jul 2020 11:37 | Produced by Tolley Read more Read more