Taxation of Chargeable Gains Act 1992 section 119A

Increase in expenditure by reference to tax charged in relation to employment-related securities

Section 119A prevents the same economic gain on employment-related securities from being taxed twice — once as employment income and again as a capital gain — by allowing the income tax amount to be added to the acquisition cost for capital gains purposes.

• Where a disposal of employment-related securities triggers an income tax charge (or is the first disposal after such a charge), the amount already taxed as employment income is added to the base cost of the securities, reducing or eliminating the chargeable gain.
• The income tax charges that qualify for this relief include those arising on restricted securities, convertible securities, securities acquired below market value, increases in market value of securities, and the exercise of securities options.
• Where an employee has agreed to pay part or all of the employer's National Insurance contributions on exercise of a securities option, the income tax relief the employee receives for doing so does not reduce the amount that can be added to the base cost for capital gains purposes.
• Securities that cease to be classified as employment-related securities (for example on the employee's death or the end of the employment relationship) are still treated as employment-related securities for this section's purposes until they are next disposed of, ensuring that earlier income tax amounts are not lost.