The following Employment Tax guidance note Produced by Tolley in association with Caroline Harwood of Burges Salmon LLP provides comprehensive and up to date tax information covering:
Where a UK resident employee acquires or is granted the right to acquire employment-related securities (ERS), he is subject to certain UK tax and regulatory requirements which apply no matter where the issuer of those ERS or his employer is located.
For tax, the basic principle is that the employee is charged to income tax on the value he receives. The situation becomes more complex where that employee is internationally mobile and the relevant rules are outlined below.
Where an event occurs in connection with the acquisition, holding or disposal of ERS, and is chargeable to UK income tax, there is a requirement to report details to HMRC. HMRC can require any ‘responsible person’ (as defined in ITEPA 2003, s 421L(3)) to report. Broadly a responsible person may be the employer, the host employer, or the issuer of the securities (special provisions apply to continental shelf workers). In practice, typically the employer or issuer of the securities (eg the holding company of a group) will make the report. For details of the new online ERS reporting requirements, see the Annual returns guidance note.
Chargeable events in relation to ERS may also give rise to a liability to National Insurance contributions (NIC). Although the NIC rules are quite different to the income tax rules (see the ‘National Insurance’ section below), both kinds of liability should always be considered.
The income tax treatment of shares and similar securities acquired by reason of employment (ERS) where the employee in question is not UK resident for tax purposes at all relevant times, was historically governed by ITEPA 2003, ss 41E, 474. The interaction of this legislation, the rules relating to residence and domicile, and the application of international tax treaties led to a great deal of complexity.
The taxation of ERS in the hands of internationally mobile employees is covered in ITEPA 2003, ss 41F–41L, introduced by Finance Act 2014. The new provisions are in line with the taxing principles of the Organisation for
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
There are several sets of provisions in the Taxes Acts which relate to ‘close’ companies, most of which are anti-avoidance measures aiming to catch transactions between those companies affected and their owners, where there may otherwise be a tax advantage. Broadly speaking, most owner-managed or
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
This note offers guidance in respect of the administration of company tax returns. If a company or organisation is subject to corporation tax they will have to complete and file a company tax return for each accounting period. A company or organisation must, in the main, file a return even if they
This guidance note provides an overview of what conditions need to be met before a business is entitled to treat VAT incurred as input tax. This note should be read in conjunction with the other notes in the ‘Claiming input tax’ subtopic. For a flowchart outlining the procedure for claiming input
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.