EIM44142 - Optional remuneration arrangements: Particular issues - Shares

Section 418 ITEPA 2003

Employees may have the option of an annual bonus that could be taken as earnings that are chargeable within Chapter 1 of Part 3 ITEPA or an award of shares. The rules can be complex and whether the OpRA rules apply and the tax treatment depend on the particular arrangements and the shares in question.

Section 418(1) specifically provides that the benefits code, and consequently the OpRA rules may have effect in relation to securities and interests in securities. However, as provided under section 418(1A), the benefits code does not have effect in relation to:

• The acquisition of employment-related securities options (with the meaning of Chapter 5 of part 7)
• Chargeable events (within the meaning of section 477) occurring in relation to such option

The exemption is not in Part 4 of ITEPA and so is not switched off by the OpRA rules.

Detailed rules on the taxation of employment related securities are set out in Part 7 ITEPA and these are covered in the Employment Related Securities Manual (ERSM).