Employment Related Securities Manual

ERSM165236 - International from 6 April 2025: ascertaining chargeable and unchargeable foreign securities income - from 6 April 2025: Examples: Example 1 – Grant before 6 April 25 and employee eligible for old OWR

In 2023/24 Isabelle is UK-resident and meets the requirement of s26A ITEPA for all relevant years. On 6 April 2023 she begins work for a French employer based in Calais whilst remaining resident but not domiciledin the UK for tax purposes. From that date she works solely in France and performs no duties in the UK. She is awarded a long-term share incentive plan on 6 April 2023 which vests on 5 April 2028, realising a gain of £1,000. Upon vesting, a proportion of the gain will be liable to tax. s41H(2) ITEPA treats an equal amount of the Securities Income as being earned over each day of the relevant period.  

The relevant period (6 April 2023 to 5 April 2028) falls wholly within tax years 23/24, 24/25, 25/26, 26/27 & 27/28. For the first 4 years, being 23/24, 24/25, 25/26 & 26/27 these are tax years in which Isabelle is UK resident and is eligible for OWR.  

For the first 2 years being 23/24 & 24/25, these are tax years in which the old s41H legislation applies and as Isabelle met the requirements of s41H(7) ITEPA, any income treated as accruing during this part of the relevant period is Foreign Securities Income (FSI). For the remaining 3 years being 25/26, 26/27 & 27/28, these are tax years in which the old s41H ITEPA criteria no longer applies, so income can no longer be apportioned under s41H(7) ITEPA and will not be treated as FSI. Therefore, any income treated as accruing during this part of the relevant period is Securities Income (SI).   

As a result, the whole of the income which vests on 5 April 2028 is treated as Securities Income (SI), being £1,000. 

FSI includes the sum of FSI in any part of the relevant period before 6 April 2025, or any part of the relevant period on or after 6 April 2025 in which the requirements of s41H(8) or (9) ITEPA apply. 

This FSI is deducted in the SI-FSI calculation in s41F(3) ITEPA. Here FSI is £400 (being £200 in 23/24 & 24/25). Therefore, the amount of Taxable Specific Income for 27/28 is £600 (£1,000 - £400). 

Any chargeable FSI treated as accruing before 6 April 2025 that is later remitted to the UK will still be taxable in the UK and may be subject to Temporary Repatriation Facility (TRF) in the 25/26, 26/27 & 27/28 tax years, here this is £400 (£200 treated as accruing in each of the 23/24 & 24/25 tax years). Please see RDRM71000 onwards. 

Isabelle may also be able to make an election and claim for OWR separately on any income apportioned to any part of the relevant period after 6 April 2025 in which she was eligible for the new OWR, subject to the transitional provisions. Please see EIM43555 onwards.