Relevant UK earnings meaning

In this issue: Tax treatment Corporate governance HMRC Manuals tracker Dates for your diary Weekly highlights from other practice areas Tax treatment HMRC’s official rate of interest rises to 3.75% Under the Taxes (Interest Rate) (Amendment) Regulations 2025, SI 2025/270, the generally applicable official rate increases from 2.25% to 3.75% per annum with effect from 6 April 2025. The rate is relevant when determining tax on employment-related beneficial loans, and for notional loans under Chapter 3C of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 where employment-related securities are acquired for less than market value. For a full list of relevant tax and other rates, see Practice Note: Tax and other rates which are relevant to share incentives. For guidance on the beneficial loan charge, see Practice Note: Tax issues on the provision of loans to employees or directors. For the notional loan charge, see Practice Note: Securities acquired for less than market value. See...

In this issue: Tax treatment Corporate governance HMRC Manuals tracker Useful information Weekly highlights from other practice areas Tax treatment HMRC confirms that its official rate of interest will remain at 2.25% HMRC has stated that its official interest rate for beneficial loan arrangements will stay at 2.25% from 6 April 2024, notwithstanding the Bank of England’s base rate of 5.25%. This rate applies when assessing the tax position of employment-related beneficial loans, and for notional loans under Chapter 3C of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 where employment-related securities are obtained for less than market value. The 2.25% figure has applied since 6 April 2023 (previously 2.00%). For a comprehensive schedule of relevant tax and other rates, see Practice Note: Tax and other rates which are relevant to share incentives. For more on the beneficial loan charge, see Practice Note: Tax issues on the provision of loans to employees or directors. For...

These changes mean that the general position for applications would appear to be as follows: CoS dated 4 April 2024 to 10 July 2024: apply rates in HC 590 CoS dated 10 July 2024 to 7 October 2024: apply rates in the guidance CoS dated from 8 October 2024 onwards: apply rates in HC 217 As some rates differ markedly, it is hoped that transitional measures on extensions will be introduced in due course. For additional background, see: LNB News 12/09/2024 15. For links to the relevant guidance, see: LNB News 12/08/2024 32. Also note that Table 3 (Eligible health and education SOC 2020 occupation codes where going rates are based on national pay scales) shows a lower going rate for SOC 2020 code 2253 Dental practitioners (Scotland) for Dental foundation training (Hospital dental services), known as Vocational Training in Scotland: £37,361, down from £38,553 (based on a 35-hour week). Table 1 lists eligible SOC 2020 occupation codes and...

Introduction and context This Practice Note provides a summary of the taxation of internationally mobile employees in relation to securities options (Options) charged to tax within Chapter 5 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). On 30 October 2024, as part of the Autumn Budget 2024 announcements, the Labour government confirmed that it would proceed with the former Conservative government’s plans to abolish the remittance basis of taxation and replace it with a residence‑based regime, scheduled to commence on 6 April 2025. These changes were enacted through Finance Act 2025 (FA 2025) and have also affected, in particular, the availability and operation of overseas workday relief. This Practice Note reflects the current position under the new tax regime; however, the previous regime is still relevant for Options granted before 6 April 2025, because any elements of the Options’ ‘relevant period’ (see discussion below—broadly, the vesting period) that occur before 6 April 2025 remain subject to certain aspects of the earlier rules. For...

Term Meaning Accounting reference date On incorporation, a company is typically assigned an accounting reference date, being the final day of the month that contains the anniversary of its incorporation. Directors can alter this by submitting the relevant form to the Registrar of Companies. It denotes the end of the annual accounting period and is also called the balance sheet date. Accounts payable Sums a business or individual owes to others for goods or services already received. Accounts receivable Sums due to a business or individual from others for goods or services supplied. Accrual In company accounts, recognition of income earned or costs incurred during a reporting period, even though the cash has not yet been received or paid. Adjusted earnings Where reported earnings are affected, positively or negatively, by exceptional one-off events in the year, directors may present adjusted earnings to clarify performance. These are earnings with exceptional items excluded, which they believe better indicate the underlying results...

Restrictive covenants or undertakings These are promises employees make during employment or on leaving, limiting their behaviour or activities. Following historic debate over whether payments for such covenants or undertakings fell within general earnings under the relevant income tax legislation, a dedicated charging provision ensures that any sums connected with current, future, or past employments or offices are treated as taxable earnings... Tax treatment Section 225 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) brings into charge payments made to an individual for agreeing to restrictive covenants...