When taxable income arises in connection with employment related securities the associated tax is accountable through self assessment unless:
- the underlying securities are readily convertible assets because they are listed on a recognised stock exchange or are subject to trading arrangements;
- the corporation tax deduction in CTA 2009 Pt 12 isn’t available eg where shares are in an unquoted subsidiary of an unquoted parent company; or
- the circumstances in ITEPA 2003 s 702 apply.
In these cases tax is accountable through PAYE and class 1 NICs are payable.
Section 702 is aimed at transactions which would not otherwise attract PAYE/NICs but involve receipt of cash or assets. In summary these are:
- the disposal of restricted securities while still subject to a restriction which is taxable under s 427(3)(c);
- the disposal of or the release of rights in connection with convertible securities which is taxable...
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