ERSM30490 - Restricted Securities

Schedule 22, FA 2003: relief for NICs elections and agreements

When an employer gives an employee shares subject to a restriction, the employer may face a future charge to employers’ NICs, but will not necessarily have any control over the timing of the charge and will not be able to predict the future amount.

This can cause accounting difficulties, as the employer will need to provide for the future liability.

To cater for this, it is possible for the employer to pass the responsibility for the employers' NICs on to the employee by a joint election or agreement – ITEPA03/S428A.

Where this happens, relief for the NICs contributions met by the employee is given by a deduction from the amount otherwise chargeable as employment income under Chapter 2 for the purposes of computing the tax liability only – the NICs charge itself is based on the gross amount before this deduction.