Please do take five minutes to answer these questions as your comments will help to influence the procedures set by HMRC. Follow this link to view the questions and please respond in whichever format suits you to policy@cipp.org.uk by 19 August 2011. Thank you in advance for your time and valuable input.
TAX TREATMENT OF SHARE BASED EARNING AFTER CESSATION OF EMPLOYMENT
15 December 2011 HMRC’s Software Developers Support Team has published a document containing details about changes to the treatment of Share based earnings after cessation of employment. Share-based earnings received after cessation of employment. Background On 6th April 2011 HMRC changed the tax code to be applied to cash payments of PAYE income made to an employee after cessation of employment which have not been included in the Form P45. The tax code to be operated changed from the basic rate (BR) tax code to zero T (0T). Payments of PAYE income made in the form of share-based payments continued to be taxed at BR whilst we reviewed the operational effects a change to 0T would have on such payments. Over the past few months we have engaged with different groups of employers, share scheme administrators and representative bodies. From our review we found that many employers favoured a simple process and a single tax code. We also found that in some cases single payments made up of both cash and share-based elements were being made. In these circumstances employers were having difficulties in operating two different tax codes on the two separate elements of the payment. Tax code change From 6 April 2012 the 0T tax code should be used on a non-cumulative basis against share- based payments (those in the form of securities, interests in securities and securities options) made to an employee after cessation of employment which have not been included in the Form P45. This will align all post-employment earnings under the same tax code. Regulatory changes This change will require us to make amendments to the Income Tax (Pay As You Earn) Regulations. We will make our draft regulatory amendments publicly available for comment in mid-January 2012 for four weeks, and would welcome feedback during this period. Personal Tax Product and Process, HMRC 15 December 2011 20 January 2012 Recently HMRC announced that the PAYE tax code applied to share-based payments made to individuals after they have ceased employment and which have not been included on form P45 must operate code 0T from 6 April 2012. The draft regulatory amendments to the Income Tax (PAYE) Regulations 2003 required to implement this change have been published on the HMRC website (including a Technical Note). PAYE CODE APPLIED TO CERTAIN SHARE BASED PAYMENTS
CIPP Policy News Journal
09/10/2012, Page 112 of 234
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