The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
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:
The taxation of ERS for internationally mobile employees is covered in ERSM160000, the Employment-related securities: internationally mobile employees guidance note and Simon’s Taxes E4.1324.
It should be noted that, even where there is a connecting employment, the securities that have been acquired may fall into one of the general exclusions from the ERS rules. The most commonly applicable exclusion is where the ERS is made available in the normal course of a domestic, family or personal relationship with the employee and not by reason of employment.
Note that the text in ERSM20220, which extended the exception to situations where shares were issued directly by the
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