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RD 7: Extra pay
or “Money from your job that's not part of your regular wages”
You could also call this:

“How employers handle taxes for employee share schemes”

This law is about how employers handle taxes for employee share schemes. An employee share scheme is when you get company shares as part of your pay.

Your employer can choose to take care of the taxes for you in two ways:

If it’s part of the deal when they offer you shares, your employer must always take out the tax and pay it to the government for you. This applies to those shares and any other shares you might get instead of them.

Your employer can also decide to handle the taxes for some benefits for some employees. To do this, they need to work out how much tax to take out, pay it to the government, and report it in their employment income information. They have to do this by a certain date, treating the day you get the benefit as your payday.

When your employer chooses to handle the taxes this way, they have to follow the rules about how to pay the tax and when to report it. They use special forms to tell the government about the tax they’ve paid for you.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: RD 8: Schedular payments

or “Types of income payments classified as schedular payments and their exceptions”
Next

Part R General collection rules
Employment-related taxes: Types of PAYE income payments

RD 7BTreatment of employee share schemes

  1. This section applies for employees or a former employee in relation to benefits under an employee share scheme, if—

  2. an employer has irrevocably chosen to withhold and pay tax for a benefit for an employee under the scheme in accordance with subsection (3); or
    1. an employer chooses to withhold and pay tax for a benefit for an employee under the scheme in accordance with subsection (4).

      1. An employer who has made an irrevocable election described in subsections (1)(a) and (3) must comply with subsection (4)(a) to (c) for—

      2. the relevant benefit and employee under the scheme:
        1. benefits offered or provided to the employee in replacement of the relevant benefit.

          1. For the purposes of subsection (1)(a), an employer has irrevocably chosen to withhold and pay tax for a benefit for an employee, if it is a term of the offer of the benefit, or of the scheme under which the benefit is provided, that the employer must withhold and pay tax under this section.

          2. For the purposes of subsection (1)(b), an employer chooses to withhold and pay tax for some benefits for some employees by—

          3. calculating the amounts of tax that must be withheld for the relevant benefits and employees, and paying the amounts to the Commissioner as described in section RD 4(1); and
            1. including the amounts in the employer’s employment income information under subpart 3C of the Tax Administration Act 1994, treating the relevant ESS deferral date as the relevant payday; and
              1. making the disclosure referred to in paragraph (b) within the time required under section RD 6(3)(a).

                Notes
                • Section RD 7B: replaced (with effect on 1 April 2019), on , by section 74(1) (and see section 74(2) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).