On 19 January, HMRC published draft Regulations for consultation about its proposal, from 6 April 2012, to tax post-termination share-related income using tax code 0T rather than BR, as applies for the tax year 2011/12.

On 25 January, HMRC published a number of questions and answers on how the legislative change would work in practice. For example, an employee who has already left and been given their P45 may receive two separate payments of PAYE income from different sources, e.g. one payment from the employer, another from the share scheme administrator. Both should operate 0T non-cumulatively on the payment they make without regard to any other payment. There are similar questions where post termination an employee receives share-related payments from more than one share scheme, or from more than one company in the Group.

There are two other FAQ of which an employer needs to be aware. Firstly, if an employee was on an NT tax code at the time of termination (e.g. they were not resident in the UK at the time), any post-termination payments should not be taxed using code 0T; the code will remain NT.

Secondly, the question is asked as to which tax code should be reported as the "final tax code" on the form P14 for 2011/12, where a final post-termination payment is a combination of a standard payment (taxed using code BR) and a share-based payment (currently taxed using code BR)? The answer is that, where a final mixed payment is made up of two separate payments made within the same tax period, the tax code 0T must be reported as the final code on the P14.