Order for employer national insurance (stock options exercise)

(My question is about national insurance and income tax, not about Capital Gains Tax.) Background: as I understand, income tax relief is given for employer national insurance contributions related to stock options exercise income if the employer national insurance is paid by an employee. 'Income Tax relief is given where the employee agrees with the employer to pay part or the whole of any employer’s National Insurance Contributions when the option is exercised' (from CG56392 - https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg56392 ). Could you advise me, please, if I have multiple 'types' of income with my employer in one month, including (a) my base pay and (b) income due to a stock options exercise, in what order should those incomes be considered for the purposes of calculating national insurance? The order matters because there are different rates related to the secondary threshold (0% and 15.05%/13.8%) in the tax year 2022/2023 ( https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2022-to-2023 ). Can the base pay in that month be counted first (independently of when exactly in that month the stock options exercise happened and therefore independently of how much of the base pay was accrued by that point), so that if the base pay is equal to or higher than the secondary threshold, then the employer national insurance for the stock options exercise income is then just simply calculated at the 15.05%/13.8% rate? (Just an example, as an illustration: if a base pay is £1,000 and an stock options exercise 'value' is another £1,000 in one month, then (as far as I understand) the employer national insurance in total would be the same regardless of the order in which both elements are considered, however, the employer national insurance part which is attributable to the stock options exercise is/may be different depending on the order.) (In this post it is assumed that the 'per month' secondary threshold can be used.) Thanks.

Hi StockOptions821485,

Unfortunately you will need to call the NI helpline on 0300 200 3500, to speak to an adviser with your question regarding the Order of calculation for NI, as more information may be required.

Thank you.

Hello. Thank you. I tried to call that number but unfortunately the person I spoke with could not answer my question. It seems the NI helpline may be unable to advise on this question. Could you advise me, please, what additional information may be required for this? Is there any manual or information regarding the order for such a situation?

Hi StockOptions821485,
We have reviewed the guidance in the National Insurance Manual NIM00002 - Overview and purpose: the structure of the NIM and Employment Related Securities Manual How securities - including shares and options over securities - are taxed and treated for National Insurance and advise you to call the Employment Related Security Schemes Helpline 0300 322 7074 alternatively you can send your query directly  to their mailbox: shareschemes@hmrc.gov.uk
Thank you.

Thank you. I contacted shareschemes@hmrc.gov.uk regarding this and after some time received a response from them. Based on the response, it looks like that team's work is related to the administration of share schemes and they do not provide advice regarding taxation queries in relation to Income Tax and National Insurance Contributions. My guess is that the first question in this thread could be quite basic although it also may be quite complex at the same time as: (a) it is at the intersection of Income Tax and National Insurance and (b) also, as I understand (I may be wrong), usually the order does not matter for National Insurance but it seems it matters for some stock options exercises. It is possible that the first question affects many cases of stock options exercise but I could not find any specific, relevant guidance regarding this. Having an answer may be beneficial for many stock options exercise cases. Given that the team whose email is shareschemes@hmrc.gov.uk can't help, could you help me with the questions, please?

Could you help me, please?

Hi StockOptions821485,

You can find further guidance here:

2023 to 2024: Employer further guide to PAYE and National Insurance contributions 

EIM11855 - PAYE: special type of income: readily convertible assets 

NIM06835 - Class 1 NICs: Securities: Readily convertible assets
 
Employers would treat this as a notional payment on their payroll software and submit the Full Payment Submission (FPS) using the exact amount, if possible. If they are unable to determine the exact amount, then they can use an estimate ensuring they have taken reasonable care to calculate it. 
 
We do not give rulings whether share schemes are taxable, and, or subject to National Insurance, but further guidance can be seen below: 

Tax and Employee Share Schemes

Employment Related Securities Manual
  
Thank you.
 

Hello. Thank you. I am sorry, could you help me regarding the (specifically) order for employer national insurance, please? As I understand, order generally may have no significance for national insurance. However, for this particular question the order does or may matter as I understand.

Hi,

Unfortunately this isn’t something we can advise via the forum.

NI will be due on all NI’able earnings within the period of their pay.

If they earn more in one month to another has no bearing on NI deductions.

There is more information needed before  full response can be given.  

There is more information here:

National Insurance: introduction: How much you pay

Thanks