United Kingdom Announces New Tax

Tax On Monitor Showing Taxation
United Kingdom Announces New Tax On Equity Compensation To Global Employees

The United Kingdom published a draft legislation recently that the tax treatment of all employment related securities be the same for all globally mobile employees. Accordingly a portion of any equity award paid to such employees should be apportioned to United Kingdom income based on the number of United Kingdom days in such financial year.

This legislation can create additional costs to the internationally mobile employee and should be reviewed carefully.

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Certified Public Accountant, Chartered Accountant and Chartered Global Management Accountant with a niche in international tax area since 1985. Specialties include cross border tax consultation and compliance for business and individual clients. Frequent speaker, author of articles on international tax topics. Founder- owner of boutique firm specializing in international tax planning and compliance.

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  1. Pallav – thanks for the “Heads Up” ! I am wondering if your alert involves a preliminary proposal of UK legislation before Parliament. If so, what is the proposed effective date ? Also, when is the physical presence rule applied for counting purposes – does it begin after the grant date for the executive stock option or is it applied after the exercise date. Thanks !

  2. James – The “relevant period” for employment related securities granted to such employees splits the compensation subject to tax by taking into consideration the grant to vest dates. To answer your question, it begins with the grant date. The effective date is September 1, 2014. Stock options granted prior to that date are not covered.

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