0T code applies for post-P45 PAYE on employee shares and options from 6 April 2012

Readers might recall that when the OT code was introduced last year to payments made to employees after a P45 has been issued, a specific exemption was made available for any PAYE that was due in Readers might recall that when the OT code was introduced last year to payments made to employees after a P45 has been issued, a specific exemption was made available for any PAYE that was due in respect of employment related securities such as shares and options.

Now with effect from 6 April 2012, the PAYE regulations apply the 0T code to all post-P45 PAYE, including PAYE on income from former employees' shares and options.

As a result there is no longer any cashflow advantage to delaying triggering any tax charges on employee shares and options until after the P45. There may be a cashflow disadvantage, as the 0T code requires PAYE to be operated on a non-cumulative basis at marginal rates of 20, 40 or 50% (as applicable to the payment), applying no personal allowance.

For more details on this change, and any other information on employment related securities such as share and option plans, please contact me.