Post-P45 Cash And Share Payments - An Update

We recently reported that changes were being introduced from 6 April 2011 to the way in which PAYE would be applied to cash payments and share vestings which occur after someone has left employment and their P45 has been issued.  Under the new rules, employers are now required to apply tax code "OT", rather than applying the basic rate of income tax.  The OT code means that PAYE is applied as if employment was continuing but the employee did not have a personal allowance.
 
There were concerns that this would make the administration of employee share plans for leavers more difficult to administer, particularly where an income tax charge arises when shares are required to be withdrawn from an approved share incentive plan.