Jurisdiction(s):
United Kingdom

UK PAYE on employment-related securities: readily convertible assets, chargeable events, best-estimate valuation, notional payments, RTI compliance, employer and other payer obligations, and internationally mobile employees

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Practice notes

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Pay as you earn (PAYE)

Pay as you earn (PAYE) is the system through which income tax (together with National Insurance contributions (NICs) and certain other statutory deductions) must be withheld by employers (and other payers) and accounted for to HMRC in respect of specified payments of, namely the following categories:

employment income
pension income
social security income

(together, PAYE income). For further information and guidance, see the Practice Note titled Scope of the PAYE system. PAYE income typically covers cash amounts paid to employees or directors (eg salaries, bonuses and termination payments). Non-cash remuneration is generally outside the operation of PAYE, but an important exception applies where amounts are provided as (or treated as) readily convertible assets for PAYE purposes. In the sphere of employment-related securities, whether PAYE obligations arise depends largely—though not entirely—on the securities in point being readily convertible assets. For full details on the meaning of readily convertible assets, see Practice Note: PAYE—readily convertible assets, intermediaries and jurisdictional scope. A key rule in this area is that all securities are deemed to be readily convertible assets (whether or not they would otherwise be so) unless they are shares that attract a corporation tax deduction...

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Web page updated on 22/05/2026

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