Sarah is R/NOR working on single contract for UK company is
awarded forfeitable shares in her US parent company for nil
consideration on 6 April 2008.
The shares have a 3-year forfeiture condition lifting on 5
April 2011
Their market value at 3 years is £20,000.
ITEPA03/S425(2) means there is no charge on acquisition.
The ITEPA03/S428 charge is £20,000
In 2008/09 she is R/NOR with 25% US and 75% UK duties. She
claims the remittance basis.
In 2009/10 she is R/NOR with 25% US and 75% UK duties. She
claims the remittance basis.
In 2010/11 she is R/NOR with 7 days of US duties. For the
remainder of the entire year she is on paid leave. She claims the
remittance basis.
In accordance with ITEPA03/S41B(2) the relevant period is
years 6 April 2008 to 5 April 2011. She has claimed remittance
basis for at least one of the years in the relevant period.
In accordance with ITEPA03/S41C(5) where there is a part of
the relevant period that is within a tax year to which subsection
(6) applies, if, the securities income treated as accruing in that
part of the relevant period is foreign. Here, in 2010/11, the
duties of Sarah’s employment are performed wholly outside the
UK, so the securities income treated as accruing in that part of
the relevant period is foreign. In 2008/09 and 2009/10, some but
not all of the duties are performed outside the United Kingdom, so
for those years, the securities income is apportioned between the
UK and the non-UK duties.
The rules give the following result:
The securities income is £20,000. ITEPA03/S41C(2)
treats £6,666 as accruing in each year.
In 2008/09 and 2009/10, 25% of the securities income is
foreign securities income.
In 2010/11 all of the securities income is foreign
securities income.
So the total foreign securities income is £1,666 +
£1,666 + £6,666 = £9,998.
This result attributes almost half of the securities income
to Sarah’s overseas duties. However, there have been no
duties for most of 2010/11, so, on a just and reasonable basis, we
can ignore the period of leave in that year and take the relevant
period to be from 6 April 2008 to 12 April 2010.
Consequently, the amount of securities income for 2008/09
and for 2009/10 is £20,000 x 365/767 = £9,517 in each
year and for 2010/11 is £20,000 x 7/767 = £182.
Sarah’s total foreign securities income is then
£2,379 + £2,379 + £182 = £4,940.
