Following a consultation meeting with HMRC, PLC has reported that from 6 April 2008, the following important tax charging chapters of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) will apply to shares (and other securities) and share options granted to employees and directors who are UK resident, but not ordinarily resident:

  • Restricted securities (Chapter 2 of Part 7);
  • Convertible securities (Chapter 3 of Part 7);
  • Post-acquisition benefits (Chapter 4 of Part 7); and
  • Options (Chapter 5 of Part 7).

Currently Chapters 2, 4 and 5 only apply to employees who are resident and ordinarily resident at the relevant time. Chapter 3 already applies to employees who are resident but not ordinarily resident in the UK.

The amendments are currently being drafted so may not be ready before the Finance Bill 2008 is released. The changes will only apply to securities and options granted after 6 April 2008.

Any comments on the changes to Part 7 of ITEPA should be addressed to the HMRC Employee Shares and Securities Unit, marked for the attention of Tom Rollinson.