Employment-related securities ― PAYE

Copyright © 2026 LexisNexis
Produced by Tolley in association with Helen Wood of HLN WD TX
Employment Tax
Guidance

Employment-related securities ― PAYE

Copyright © 2026 LexisNexis
Produced by Tolley in association with Helen Wood of HLN WD TX
Employment Tax
Guidance
imgtext

Introduction

Awards of securities, exercise (or vesting) of securities options and certain other events relating to employment-related securities (ERS) may be liable to income tax as earnings under ITEPA 2003, s 62, or the special ERS rules under ITEPA 2003, ss 417–554 (Pt 7).

The tax charges may be personal tax charges for the employee via self-assessment, or employers may be obliged to withhold income tax and NIC under PAYE.

This note aims to set out which ERS related tax charges, and in what circumstances, employers must operate PAYE and NIC, and the practical implications of doing so.

Share awards

An outright award of ERS represents ‘money’s worth’ and is taxable under ITEPA 2003, s 62. The taxable amount is the market value of the securities less any payment made by the employee. Market value is de-fined at TCGA 1992, ss 272–273

The ‘money’s worth’ taxable amount may be a personal tax liability of the employee, payable via their self assessment tax return, or there may be a liability

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
Helen Wood
Helen Wood linkedinicon

Founder, HLN WD TX , Employment Tax

Helen Wood is the founder of HLN WD TX, a share schemes and employee incentives advisory business.She qualified as a CA with ICAS in 2009 and has worked as a specialist reward and incentives advisor for 17 years, spending 13 of those at KPMG followed by 3 ½ years as an Associate Director at RSM. Helen has worked with businesses ranging from start-ups to fully listed companies, spanning owner-managed businesses, private equity portfolio companies, and AIM listed businesses.She advises on a wide range of employee share schemes and employment related securities matters including the design and implementation of effective management and employee incentives; tax valuation of employment related securities, buy and sell side transaction support, HMRC compliance, tax due diligence and employee ownership trust transactions.

Read moreRead more
Powered by Tolley+™
  • 17 Dec 2025 12:40

Home/ Tolley Tax Guidance/ Employment Tax / Providing share awards to employees

Popular Articles

Personal Tax

Timing of disposal for capital gains tax

Timing of disposal for capital gains taxDate of disposalThe date of the disposal determines the period in which the gain is subject to capital gains tax (CGT). When the rates of CGT change, the determination of the date of disposal can also affect the rate of CGT that applies to the gain.See the

14 Jul 2020 13:50 | Produced by Tolley Read more Read more
tag-icon Year-end tax planning
Owner-Managed Businesses

Class 4 national insurance contributions

Class 4 national insurance contributionsWhat is Class 4 NIC?Class 2 and Class 4 national insurance contributions (NIC) are paid by self-employed individuals and partners in a partnership on their profits arising within the UK. This guidance note considers Class 4 contributions. For Class 2

14 Jul 2020 11:13 | Produced by Tolley Read more Read more

Exemption ― insurance ― overview

Exemption ― insurance ― overviewThis guidance note provides an overview of the VAT treatment of insurance products and should be read in conjunction with the Insurance ― specific transactions and Exemption ― insurance ― brokers and agents guidance notes.Is insurance exempt from VAT?Supplies of

Read more Read more