On Friday 6 June 2008, the government tabled a considerable number of amendments to Schedule 7 of the Finance Bill 2008. This is the schedule setting out reforms to the taxation of non-domiciled and not ordinarily resident (R/NOR) taxpayers under the remittance basis.

Some of these new amendments affect provisions about employment-related securities and securities options and these are discussed in this update.

One of the most significant amendments clarifies the PAYE position where tax arises on securities or options granted to an R/NOR taxpayer. If part of the taxable amount will (or is likely to) be taxable in the UK only if remitted, because the taxpayer elects for the remittance basis and has relevant foreign duties, the amendments will allow an employer to take this into account in working out PAYE income tax. However, it seems the national insurance contributions (NICs) due in these circumstances could still be computed on the full taxable amount, ignoring the effects of the remittance basis. This will clearly be the case for NICs arising on securities options and apparently HMRC consider that this will also be the position for all other securities tax charges. We hope to clarify this further shortly.