»Ê¹ÚÌåÓýapp

Fred is awarded free forfeitable shares on 1 September 2015. ITEPA03/S425 provides that there is no income tax liability at the time of the award as the shares cease to be forfeitable within 5 years of acquisition.

»Ê¹ÚÌåÓýapp forfeiture condition lifts on 30 September 2015 when the shares are worth £50,000, so £50,000 counts as employment income under ITEPA03/S426.

However, Fred is not resident in the UK throughout this period and his duties for the period from 1 September to 30 September were performed entirely outside the UK.

Under ITEPA03/S41G(2), the ‘relevant periodâ€� for forfeitable shares begins with the day of the acquisition and ends with the day of the chargeable event. »Ê¹ÚÌåÓýapprefore the relevant period is 1 September to 30 September 2015. As Fred’s duties were entirely foreign during the period, all of the securities income is unchargeable foreign securities income and would, on the basis of ITEPA03/S41H, not be taxed in the UK.

On examination of the facts, it is clear that the shares were awarded to Fred in recognition of his duties over the twelve months prior to 1 September 2015. In that period, Fred was resident in the UK and all of his duties were performed in the UK. »Ê¹ÚÌåÓýapp just and reasonable override would take effect to treat none of the £50,000 securities income as foreign.

»Ê¹ÚÌåÓýapp whole £50,000 would therefore be taxable specific income for 2015/16 under ITEPA03/S41F(3).