HS305 Employment-related shares and securities - further guidance (2015)
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It deals with some less common circumstances giving rise to tax liabilities relating cessation of all stock options and bonuses the award or ownership of employment-related securities.
Employment-related securities are securities you acquired because of your employment, when your employer or someone connected to your employer gave you or another person an opportunity to acquire them.
The most commonly provided securities are:. There are other types of securities. The notes and working sheets that follow will help you work out the taxable amount on the exercise of share options, or on shares you get free or cheaply, because of your employment or other taxable events for employment-related securities.
Normally these amounts are already included in your P60 or, where you have left employment, P45 which are included in the Employment pages. You should include these amounts in the Employment pages. The rules are complex. You should refer to the Residence, remittance basis etc notes and the International section of the Employment Related Securities Manual for guidance. If an error is discovered, you may have to pay more tax.
Fill in a working sheet for each taxable event and put the total figure excluding any amount included on the Employment pages in box 1. Keep the working sheets in case HMRC ask to see them. You can get information to help you work out the taxable amount to enter in box 1 from the working sheets and notes that follow. The amount cessation of all stock options and bonuses to Income Tax depends on how long the shares were held in the plan. If the shares were in the plan for:.
If the shares are subject to forfeiture, there is no charge to Income Tax when they become forfeit. Complete working sheet 1 for each taxable event. If dividend shares cease to be subject to the plan within 3 years of acquisition and for a reason that is not listed above the amount of the dividend used to buy the shares should be included in box 3 in the dividend boxes on page TR 3 of your tax return for the year the shares cease being part of the plan.
The exercise of an option in all other circumstances will be chargeable to Income Tax use working sheet 2. The exercise of an option in all other circumstances will be chargeable to Income Tax use working sheet 3. Cessation of all stock options and bonuses working sheet 6. Complete working sheet 7. If these circumstances apply, cessation of all stock options and bonuses working sheet 8.
The taxable benefit is worked out by treating the difference between the fully paid-up value of the securities and what you paid for them as if it were an interest-free loan from your employer. There are provisions for interest relief on certain loans to acquire shares in companies.
For more information see Helpsheet Interest and alternative finance payments eligible for relief on qualifying loans and alternative finance arrangements.
Your employer should tell you the taxable amount but if not, or if you have more tax to pay, complete working sheet 10 to calculate the taxable amount. Your employer should tell you the taxable amount but if not, or if you have more tax to pay, complete working sheet 11 to calculate the taxable amount.
Where the securities acquired are restricted in some way, the market value of those securities may be less than the value of similar, unrestricted securities. These are securities that can be converted into securities of a different description.
Where cessation of all stock options and bonuses securities are acquired, the market value for box 1 of working sheet 11 should show the market value of those securities as if they were not capable of being converted.
Your employer should tell you the taxable amount but if not, or if you have more tax to pay, complete working sheet 12 to calculate the taxable amount. Where restricted securities have been acquired on or after 16 AprilIncome Tax will be due each time there is a chargeable event in relation to those securities. Use working sheets 13 and 14 to help you to calculate the taxable amount.
Use working sheet 13 where there is only 1 chargeable event arising after acquisition. Use working sheet 14 in all other cases. If you acquired employment-related securities that carry an immediate or potential right to be converted into securities of a different description, Income Tax will be due each time a chargeable event arises for these securities.
Your employer should tell you if there has been a chargeable event or if the securities qualify cessation of all stock options and bonuses exemption. Use working sheet 15, 16 or 17 to work out the taxable amount. The relevant date will be either:. Use working sheet 18 to work out the taxable amount. Where restricted securities are acquired on or after 16 AprilIncome Tax may be due if the market value of your securities has been artificially reduced within the period of 7 years ending on the relevant date.
Complete working sheet 13 or 14entering in box 1 the unrestricted market value of the securities on the relevant date, ignoring the effect of the artificial reduction to calculate the taxable amount.
Securities that are acquired on or after 16 April and carry a risk of forfeiture should be treated in the same way as restricted securities see above where there has been an artificial reduction in the 7 year period ending on the date the securities were acquired. Complete working sheet 15entering in box 1 the market cessation of all stock options and bonuses of the securities on the date of the chargeable event, ignoring the artificial reduction in value.
Where any consideration or benefits received have been artificially reduced within the period of 7 years ending on receipt of the consideration or benefits, complete the working sheets.
In the boxes indicated enter the consideration or benefits received, ignoring the artificial reduction. Income Tax is due where you or a person connected with you dispose of your securities so that neither of you has any further entitlement to them and the consideration received is more than the market value at the time of disposal.
Complete working sheet 19 to work out the taxable amount. Income Tax is due on the value of any benefits received by you or a person connected with you because of your ownership of employment-related securities at the time you cessation of all stock options and bonuses them.
Complete working sheet 20 to work out the taxable amount. New rules regarding the remittance basis, for those individuals who are resident in the UK cessation of all stock options and bonuses are either not ordinarily resident or not domiciled in the UKapply to employment-related securities and securities options acquired on or after 6 April This note provides a brief summary of the way in which employment-related securities acquired from this date are taxed.
The new rules are complex. The calculation of what is cessation of all stock options and bonuses securities income is also explained here. If your employer had enough information to calculate any foreign securities income, they may have deducted this from the amount to be taxed under PAYE and included it as a taxable amount on your P Employee shareholder is an employment status, available from 1 September Employee shareholders have different employment rights to employees.
When employee shareholder shares are acquired, an amount equal to the market value of the shares, minus any payment that the employee is treated as making for the shares, is treated as earnings from the employment for the year in which they are acquired. Employee shareholder shares are employment-related securities and will be subject to the rules of Part 7 of the Income Tax Earnings and Pensions Act.
In working sheet 13at Step 2, the deemed payment for employee shareholder shares would count as the amount of the consideration given to acquire the securities. In working sheet 4the deemed payment will be treated as the amount paid for the securities.
That would go in box 6 of working sheet 15to calculate any gain on conversion. Online forms, phone numbers and addresses for advice on Self Assessment. To help us improve GOV. It will take only 2 minutes to fill in. Skip to main content. Home Employment-related shares and securities - further guidance: HS Self Assessment helpsheet.
Contents Tax advantaged share schemes All securities options including tax advantaged schemes Non tax advantaged securities options including share options Grant of a securities option — residence issues Acquisition of securities as benefits Securities sold or transferred Securities acquired from your employment Securities acquired: The most commonly provided securities are: Is this page useful? Yes this page is useful No this page is not useful Is there cessation of all stock options and bonuses wrong with this page?
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