Martina is employed by a UK plc and is UK-resident but not
ordinarily resident here in 2009/10 when, on 1 September 2009, she
receives an award of restricted securities which are subject to a
3-year sale restriction and forfeiture if she leaves the employment
within the same period, after which there are no remaining
restrictions on the securities. On the lifting of the restrictions,
£10,000 counts as employment income by virtue of ITEPA03/S426.
Martina’s job involves wholly UK duties except for one
month every year which she spends working at the offices of the
German subsidiary in Frankfurt. In 2010/11 she is still not
ordinarily resident in the UK but for 2011/12 and 2012/13 she is
ordinarily resident. She claims the remittance basis for 2009/10
and 2010/11.
In accordance with ITEPA03/S41B(2), the relevant period for
Chapter 5A is from 01/09/09 to 31/08/12. ITEPA03/S41C(5)(b) will
apply to treat as foreign one twelfth of the gain that is treated
as accruing over that part of the relevant period during which
Martina is NOR (see Example 6 at
ERSM160871).
When the chargeable event under ITEPA03/S427 occurs (see
ERSM30390), in accordance with
ITEPA03/S700A, the employer may use its best estimate to operate
PAYE only on the amount of employment income that is not foreign
securities income.
As the securities are shares in a UK plc, they are UK assets
and the related foreign securities income is treated as remitted to
the UK in the year of the chargeable event and, while not subject
to PAYE, is therefore taxable specific income for that year, to be
included in Martina’s Self Assessment for the year. See
ERSM161100.
Class 1 NIC is due by virtue of Regulation 22(7) SS(C)R 2001
at the same point at which tax arises, on £10,000, the amount
that counts as employment income by virtue of ITEPA03/S426. The
acquisition is disregarded and the later charge is deemed earnings.
No reduction is due in respect of apportionment under Chapter 5A of
Part 2 of ITEPA 2003 (See
ERSM161040)
