Could anybody please help me or point me in the right direction please;

I would like to use REST or SPServices, when a script is run from a button on a sharepoint form; to loop through all items in a list and update/replace the item permissions of every item when the current permissions include a user which will be selected in a people picker in the sharepoint form. There will be a second people picker which i would like to add that person to the item permissions.

I have found loads of great examples for both REST and SPServices to update the viewable fields but none which deal with permissions.

Hi,            

To update list item permissions using REST API, there are two important methods would be helpful:

BreakRoleInheritance method

https://msdn.microsoft.com/en-us/library/office/dn531433.aspx#bk_ListItemBreakRoleInheritance

RoleAssignmentCollection methods

https://msdn.microsoft.com/en-us/library/office/dn531432.aspx#bk_RoleAssignmentCollectionMethods

Here is a blog about how to set unique permissions on a list item with code demos provided for your reference:

http://spsite.pro/Blog/Post/3/SharePoint-2013-REST-API-%E2%80%93-How-to-set-Unique-Permissions-%28Item-Level-Permissions%29