Share options taxed under Section 8A are the gains an employee realises from rights to acquire shares granted through an employer share scheme. The gain - broadly the value over what the employee paid - is treated as remuneration.
What it means
When an employee exercises share scheme rights, the benefit they receive is employment income, not a tax-free windfall. Section 8A (and related provisions) bring the gain into remuneration so it is taxed like other employment income, preventing share schemes being used to pay people untaxed.
Where it fits in
The gain is an earnings component for the period it is realised, included in remuneration for PAYE. Because it can be large and irregular, a directive may govern the tax. It is distinct from dividends, which have their own treatment, and is reported under the relevant IRP5 source code.
Key rules
- Gains from employer share scheme rights, taxed as remuneration.
- Brought into income so share schemes are not an untaxed benefit.
- May require a directive given the size and irregularity of the gain.
- Reported under the prescribed IRP5 source code.
