ERSM170300 - PAYE & NICs

Gains from securities options

The charges imposed by Chapter 5 Part 7 ITEPA 2003 (securities options) are subject to PAYE in accordance with ITEPA03/S700, as amended by FA03/SCH22.

Where there is a charge (see ERSM110500) on:

  • an acquisition of securities pursuant to the employment-related securities option under ITEPA03/S477 (3)(a),
  • the assignment for consideration of the employment-related securities option under ITEPA03/S477 (3)(b),
  • the release for consideration of the employment-related securities option under ITEPA03/S477 (3)(b), or
  • the receipt of a benefit in connection with the employment-related securities option under ITEPA03/S477 (3)(c),

the employment income of the employee will be subject to PAYE if the employee has:

  • acquired securities which are readily convertible assets (RCA) (see ERSM170020),
  • received cash, or
  • received consideration or benefit in the form of a RCA (see ERSM170020).

Where only part of the employment income is represented by cash or RCA, PAYE is operated on the part that is cash and any part regarded as RCA.