Information in online Self Assessment for a deduction related to employer NIC for stock options

As per ERSM110520 ( https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm110520 ), as I understand, '[...] the amount of employer’s NICs is relievable by deduction from the amount treated as employment income [...]' in regard to stock options if that amount is paid by an employee (potentially, under certain condition(s)). Could you advise me, please, where in the online self-assessment 'form' can information be entered for that deduction (for the tax year 2022-2023)?

Hi,

Please refer to:

Employment-related shares and securities (Self Assessment helpsheet HS305)

Thank you.

Thank you. As far as I understand, I should not complete the part in the online Self Assessment form that is the same as or similar to the 'Share schemes' box 1 in the 'Additional information' because my employer already processed the stock options exercise via its payroll. (If I was able to and needed to complete that part (using the working sheet 7 (?) that is referred to in 'HS305 Employment-related shares and securities — further guidance (2022)'), then I assume I would be able to provide there an amount that is reduced by the employer's NI payable by me. However, in my case I guess I can't use that part? Can I provide there a negative value in the online Self Assessment form for the adjustment for the employer's NI payable by me?) I assume in my case, because my employer already processed the stock options exercise via its payroll, the Employment part of Self Assessment should be used then. However, the employer did not reduce my taxable income by the amount of the employer's national insurance payable by me. Could you advise me, please, how can I reduce my taxable income in the online Self Assessment by the amount of the employer's NI payable by me in this case?

Hi,

If your employer has processed the stock option exercise through the payroll, this will be reflected in your P60 at the end of the tax year.

If you’ve entered into a formal National Insurance contributions (NICs) election to meet employer’s NICs due on the exercise of an option or on the acquisition of certain types of shares, you can deduct the employer’s NICs you’ve paid in calculating the tax due.

If you’ve entered into a NICs agreement instead, you can only deduct the NICs you paid to your employer before 5 June following the tax year in which the relevant share transaction occurred.

Thank you.

Thank you very much. Could you advise me, please: 1. If it is a NICs agreement, is it correct that the deadline of 'before 5 June following the tax year in which the relevant share transaction occurred' is only in relation to money being with the employer (so that the employer pays that to HMRC), but not for when I can deduct it, e.g., via Self-assessment (if possible)? 2. How can I deduct the NICs for the income tax in the online Self-assessment? What section/box (or similar) should be used for that?

Hi,

1. That is correct.  
2. You will need to use the working sheets that are inlcuded on the HS305 that you referred to in your original query.

Thank you.

Thank you very much. Regarding (2): > You will need to use the working sheets that are inlcuded on the HS305 that you referred to in your original query. My UK employer processed the stock options exercise (for income) via its payroll. Income tax and national insurance contributions were paid by my UK employer and things were reflected in my payslips. My understanding (I may be wrong) of HS305 is that HS305 is (at least mostly) for the Self Assessment Additional information. For example, HS305 says: > You do not complete the ‘Share schemes’ box for taxable amounts which your employer has fully taxed. Normally these amounts are already included in your P60 (or, where you’ve left employment, P45) which are included in the Employment pages. Based on my current understanding, I don't need to fill the Additional information section(s) in in regard to the stock options exercise (for income) since my UK employer already processed it via its payroll and the amount(s) for the stock options exercise (regarding income) would be in the Employment section(s). Because of that, even if I use the working sheets, I am not sure where I should put figure(s) for the income tax relief in Self Assessment. However, I still would like to claim the income tax relief to deduct the employer NICs payable by me for income tax. Could you advise me, please, in my case, since my UK employer already processed the stock options exercise via its payroll (but my employer did not reduce the income tax based on the income tax relief due to the employer NICs payable by me), where in Self Assessment can I claim the income tax relief?

Hi StockOptions821485,
There seems to have been an election or agreement in place, not sure which, whereby you have paid the employers NIC on the Options.
It seems from the guidance, that as the employer was required to operate PAYE, the employer should have taken this into account when calculating the tax due.
Please see the following guidance.
ERSM30490 - Restricted securities: relief for NICs elections and agreements
ERSM110520 - Securities Options: deductible amounts: employer's NICs met by employee
NIM06813 - Class 1 NICs: employment-related securities: shares: employee agrees or elects to pay secondary Class 1 NICs 
If that's the case, then there is nothing for you to claim.
The adjustment should have been done by your employer as part of their PAYE calculations and you should speak to them in the first instance to check whether they have done so and if not, they should advise you why not.
Thank you. 
  

Thank you very much. As far as I understand, my employer did not reduce the income for income tax by the employer national insurance payable by the employee. My employer has been in administration. It is potentially unlikely now that it can now be resolved with the employer. Could you advise me, please, in such a case, what should I do? Can I use the equivalent (?) of 'Box 20 Other expenses and capital allowances' ('Employment expenses') in the online Self Assessment to provide there a value for the employer national insurance payable by the employee?

Hi ,
 

If you’ve entered into a formal National Insurance contributions (NICs) election to meet employer’s NICs due on the exercise of an option or on the acquisition of certain types of shares, you can deduct the employer’s NICs you’ve paid in calculating the tax due. If you’ve entered into a NICs agreement instead, you can only deduct the NICs you paid to your employer before 5 June following the tax year in which the relevant share transaction occurred.' But if his employer has not deducted NICs then TP cannot include this in the computation for CGT. HS305 Employment-related shares and securities — further guidance (2023) - GOV.UK (www.gov.uk)   like 1 HS305 Employment-related shares and securities — further guidance (2023) . Thank you .

Thank you very much. I am sorry, my query is not about CGT but it is about income tax and employer national insurance. (You mentioned 'the computation for CGT'.) I guess 'TP' means tax payer. I am sorry, I am not sure what does 'like 1' mean. As far as I understand, it was not a formal 'election'. Therefore, I presume it was a NICs 'agreement' or similar. The money for the employer NICs payable by me (the employee) was with my employer before 5 June following the tax year in which the relevant stock options transaction(s) occurred. I see the employer NI 'paid' by me in my payslip. So, there was employer NI payable by me (the employee) (and it was before the relevant 5 June). However, my employer did not deduct it from my income tax, as far as I understand. Could you advise me, please, in such a case (including taking into account that my employer has been in administration), what should I do? Can I use the equivalent (?) of 'Box 20 Other expenses and capital allowances' ('Employment expenses') in the online Self Assessment to provide there a value for the employer national insurance payable by the employee?

Hi , Good morning , I am too much tense about my income tax .I don't know ,what's the going on .I want sort out this .some one using my N.I .I got papers .I said to hmrc on phone Belfast City. I want my papers at home of tax .they sent ,but there is showing wrong data .I never work airport.papers showing near 27;000 pounds my income .and data showing in this year .as well 2020 data showing ..employer pay to Me,but I was not uk that time .i was living in india.pleasw help me .I will do something with me ...I am toooo much tense by these things .why everything happens with me .there is no my mistake .I want enquiry .I am calling to hrmc ,,but they cut my call ,after listening N number ..please I need help .I wil wait reply .
Thanks

Email add removed admin .
Also name removed admin .

Hi StockOptions821485

TP is short for tax payer.  "Like 1" is a typo and should not be there.  It has no meaning.  
If your employer has not deducted employer NIC from the payment, then you cannot deduct it from the payment received, when calculating the tax due.

Thank you

Hi Harpreet Kaur,
We can only provide general advice in this forum.
You will either have to contact the Self Assessment helpline on 0300 200 3310 or write to:
HMRC H.M. Revenue and Customs Self Assessment BX9 1AS.
With details of your issue.
Thank you. 

Thank you very much for your reply, HMRC Admin 5. I am sorry, section 481 of ITEPA03 says that: 'Relief is available under this section against an amount counting as employment income under section 476 if [...]' and that 'Relief under this section is given by way of deduction from the amount otherwise counting as employment income'. (And ERSM110520 is relevant as well, as I understand.) It seems to me that per the legislation the relief 'is available' and it 'is given by way of deduction from the amount otherwise counting as employment income'. As I wrote before: The money for the employer NICs payable by me (the employee) was with my employer before 5 June following the tax year in which the relevant stock options transaction(s) occurred. I see the employer NI 'paid' by me in my payslip. So, there was employer NI payable by me (the employee) (and it was before the relevant 5 June). However, my employer did not deduct it from my income tax, as far as I understand. Could you advise me, please, can I use the relief as per section 481 of ITEPA03? If I can, how can I use it? If I can't, could you advise me, please, why I can't use it?

Hi StockOptions821485,
You would deduct this amount from your income when calculating the tax due.
Thank you.

> You would deduct this amount from your income when calculating the tax due. Thank you very much. It is very helpful. As I understand, I can deduct this amount from my income. Could you advise me, please, how should it be done in my case (as per the details in this thread) in the online Self Assessment for this (for deducting the employer national insurance payable by the employee): 1. Can and should I use, e.g., '[Box 20 ]Other expenses and capital allowances' ('Employment expenses', 'Employment') (or its equivalent, if any, in the online form) for specifying the amount for this deduction? 2. Or, can and should I use, e.g., '[Box 6 ]Post-cessation trade relief and certain other losses' ('Other tax reliefs', 'Additional information') (or its equivalent, if any, in the online form) for specifying the amount for this deduction? 3. Or, can and should I reduce the income amount for the '[Box 1 ]Pay from this employment – the total from your P45 or P60' ('Employment') (or its equivalent, if any, in the online form)? 4. Or, can I do something else for this deduction in the online Self Assessment?

Hi,

If an employee and employer elect to transfer the legal liability to pay all, or some, of the secondary Class 1 NICs, to the employee then such an election must be approved by HMRC.  

Please have a look at link below for more information.

NIM06813 - Class 1 NICs: employment-related securities: shares: employee agrees or elects to pay secondary Class 1 NICs

Thank you.

HMRC Admin 32, thank you. As I wrote previously in this thread, "As far as I understand, it was not a formal 'election'. Therefore, I presume it was a NICs 'agreement' or similar." HMRC Admin 20 wrote in this thread: "You would deduct this amount from your income when calculating the tax due". Could you help me with my question(s) from my previous message in this thread, please?

Hi StockOptions821485,
We are unable to review personal matters in this forum.
For an answer to a personal question of this nature, you would need to contact our Self Assesment helpline on 0300 200 3310 or contact our webchat facility here:
Contact HMRC
Thank you.