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E4.502 Share based earnings of, from, or by reason of, the employment—overview

This article outlines briefly the most common methods by which non tax-advantaged share awards are likely to be taxed, including reference to certain historical case law.

As regards:

1. Ìý

   •ÌýÌýÌýÌý details of how an employee applying their earnings to purchase of shares may affect the tax treatment, see E4.503

2. Ìý

   •ÌýÌýÌýÌý shares purchased at a discount, see E4.504

3. Ìý

   •ÌýÌýÌýÌý offers to allot shares, see E4.505

4. Ìý

   •ÌýÌýÌýÌý the consequences of employees taking advantage of public share offers, see E4.506

In the most straightforward case, where securities or an interest in securities are not subject to any restriction, condition, etc and are acquired free of charge or at a discount, a tax charge normally arises under the heading of 'general earnings' – either as earnings 'of the employment' under ITEPA 2003, s 62, or 'by reason of the employment' as taxable benefit under ITEPA 2003, ss 201–215 (Pt 3, Ch 10).

The phrase