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Employment-related securities ― overview

Produced by Tolley in association with
Employment Tax
Guidance

Employment-related securities ― overview

Produced by Tolley in association with
Employment Tax
Guidance
imgtext

Introduction

Shares, or other forms of securities, awarded to employees may be taxed as:

  1. •

    earnings, or

  2. •

    under the special employment-related securities (ERS) rules, which seek to modify the tax position in cases where the tax result that would flow from the particular circumstance does not reflect the full economic value received, or where the Government has determined that it wants a different tax burden or timing to apply.

What are securities?

The definition of ‘security’ includes stocks and shares of any description but is very wide and also includes items which one would not normally describe as a security, such as insurance contracts and contracts for differences. The definition excludes certain items such as cheques and bank statements (which hardly any-one would think of as such) but, perhaps surprisingly, excludes security options (unless used as part of a tax avoidance arrangement).

However securities options are subject to their own specific rules. ITEPA 2003 ss471 – 484 (Chapter 5)

The significance of ‘employment related securities’

It has

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Helen Wood
Helen Wood

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.

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