Income Tax (Earnings and Pensions) Act 2003 (c. 1)

Part 7 U.K. [F1 Employment income: income and exemptions relating to securities]

Textual Amendments

F1 Pt. 7 heading substituted (with effect in accordance with Sch. 22 para. 2(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 2(1)

Modifications etc. (not altering text)

C1 Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)

[F2 Chapter 3A U.K. Securities with artificially depressed market value

Textual Amendments

F2 Pt. 7 Ch. 3A inserted (16.4.2003 with effect in accordance with Sch. 22 para. 5(2)-(4) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 5(1)

Tax charge on acquisition U.K.

446B Charge on acquisition U.K.

(1) This section applies where the market value of employment-related securities at the time of the acquisition has been reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes within the period of 7 years ending with the acquisition.

(2) The taxable amount determined under section 446C counts as employment income of the employee for the tax year in which the acquisition occurs.

(3) But this section does not apply if section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applies in relation to the employment-related securities.

(4) This section does not affect any liability to income tax arising in respect of the acquisition of the employment-related securities under—

(a) Chapter 1 of Part 3 (earnings),

(b) Chapter 10 of Part 3 (taxable benefits: residual liability to charge),

[F3 (ba) section 226A (employee shareholder shares: amount treated as earnings),]

(c) Chapter 3 of this Part (acquisition by conversion),

(d) Chapter 3C of this Part (acquisition for less than market value), F4 ...

(e) Chapter 5 of this Part (acquisition pursuant to securities option) [F5 , or

(f) Chapter 2 of Part 7A (employment income provided through third parties)]

Textual Amendments

F3 S. 446B(4)(ba) inserted (1.9.2013) by Finance Act 2013 (c. 29), Sch. 23 paras. 8, 38; S.I. 2013/1755, art. 2

F4 Word in s. 446B(4) omitted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 2 para. 19(a)

F5 S. 446B(4)(f) and word inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 19(b)

446C Amount of charge U.K.

(1) The taxable amount for the purposes of section 446B (charge on acquisition) is—

(2) FMV is what would be the market value of the employment-related securities at the time of the acquisition if the things mentioned in section 446B(1) had not been done.

(3) MV is the actual market value of the employment-related securities at the time of the acquisition.

(4) But where what would be MV is less than the amount of any consideration given for the acquisition of the employment-related securities, MV is the amount of that consideration.

[F6 (4A) Subsection (4B) applies if, prior to the acquisition, the employment-related securities were the subject of a relevant step within the meaning of Part 7A by reason of which Chapter 2 of that Part applied in respect of the employment.

(4B) If what would be MV in accordance with subsection (3) or (4) (as the case may be) is less than the amount that counted as employment income of the employee in respect of the employment under Chapter 2 of Part 7A, MV is the amount of that employment income instead of the amount determined in accordance with subsection (3) or (4).]

(5) This section is subject to section 446D (restricted securities and convertible securities).

Textual Amendments

F6 S. 446C(4A)(4B) inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 20

446D Restricted securities and convertible securities U.K.

(1) Where the employment-related securities are restricted securities or a restricted interest in securities, FMV (but not MV) is to be determined as if the employment-related securities were not restricted securities or a restricted interest in securities; and, accordingly, sections 426 to 431 (post-acquisition charges on restricted securities) do not apply to the employment-related securities.

(2) Where the employment-related securities are convertible securities or an interest in convertible securities, FMV and MV are to be determined as if they were not.]