ERSM165237 - International from 6 April 2025: ascertaining chargeable and unchargeable foreign securities income - from 6 April 2025: Examples: Example 2 – Grant after 6 April 25 and eligible for the new OWR
In 2025/26 Olivia is UK-resident and has not been resident in any of the previous 10 tax years. On 6 April 2025 she begins work for a UK employer but is based in Berlin whilst remaining resident in the UK for tax purposes. From that date she works solely in Germany and performs no duties in the UK. She is awarded a long-term share incentive plan on 6 April 2025 which vests on 5 April 2030. Upon vesting, a proportion of the gain will be liable to tax. She meets the eligibility requirements and claims OWR in all the years she is eligible to do so.
The relevant period (6/4/25 to 5/4/30) falls wholly within the 2025/26, 26/27, 27/28, 28/29 & 29/30 tax years. These are tax years in which relief under s41H(7) ITEPA is no longer available in Chapter 5B ITEPA, so none of the income is Foreign Securities Income (FSI), so the full gains are chargeable in the UK and are treated as Securities Income.
As a result, the whole of the Income which vests on 5 April 2030 is treated as Securities Income and therefore will count as an amount of Taxable Specific Income for the 29/30 tax year.
Olivia may be able to make an election and claim for OWR under Chapter 5C ITEPA on any income apportioned to any part of the relevant period in which she was eligible for OWR. Please see EIM43555 onwards.