Background

Tax and National Insurance liabilities on the acquisition of shares and securities must be accounted for through PAYE where the underlying shares are readily convertible into cash. This also extends to various other liabilities under the employment-related securities legislation. The legislation on readily convertible assets is at ITEPA 2003, ss 696–702.

The legislation for income tax and NIC in this area is now for all practical purposes the same, so if income tax is payable, both employer’s and employee’s NIC also has to be paid over to HMRC, under PAYE.

For income tax purposes, HMRC’s guidance is at EIM11900 and the NIC equivalent is at NIM06835.

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