Wed 25 Nov 2015
A raft of changes to both tax-advantaged and non-tax-advantaged employee share schemes have hit the statute books in recent years and it is, perhaps, not surprising that amongst the changes made to date a few matters slipped through the net.
Amongst the Autumn Statement publications is an announcement that the government will now introduce a number of technical changes to streamline and simplify aspects of the tax rules for tax-advantaged and non-tax-advantaged employee share schemes.
These changes will provide more consistency, including putting beyond doubt the tax treatment for internationally mobile employees (IMEs) of certain employment-related securities (ERS) and ERS options (ERSO).
The taxation of equity awards to IMEs changed with effect from 6 April 2015. A summary explanation of those changes can be found in our IME factsheet .
Inconsistencies have been found in the earlier changes that result in similar equity awards being treated differently. HM Treasury wish to clarify the position so that a uniform approach is taken going forward.
The Autumn Statement publication confirms that any charge to tax will now arise under the rules that deal with ERS options (Chapter 5 of ITEPA 2003), rather than as general earnings (s 62 ITEPA 2003). The new draft legislation will be contained in Finance Bill 2016, to be published on 9 December 2015.
It is not yet clear if the changes will be backdated to 6 April 2015 or take effect from 6 April 2016. We also await further news on whether or not the change will impact subsisting awards now vesting, or only apply to new awards.
This news will be particularly welcome to international employers, many of whom have found it challenging to navigate the UK tax treatment for 2015/16 vestings, especially in relation to Restricted Stock Units (RSUs) and other Long Term Incentive Plan (LTIP) option and share awards.
For more information contact Liz Hunter
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