Ken Moody explains an important recent development, which impacts on the scope of an exception from the employment-related securities rules for shares acquired through personal relationships.
Shares acquired by directors and employees are generally deemed to be acquired by reason of their employment, and are therefore employment-related securities (ERS) (ITEPA 2003, s 421B(3)).
An exception is made, however, where:
- The person by whom the right or opportunity is made available is an individual, and
- The right or opportunity was made in the ‘normal course of domestic, family or personal relationships’.
HMRC guidance in the Employment Related Securities manual at ERSM20220 adopts a ‘common sense’ view of the exception. It gives the example of a father on retirement passing his shares to his son and daughter, who are also employees of the