422 Application of this Chapter
This Chapter applies to employment-related securities if they are— (a) restricted securities, or (b) a restricted interest in securities, at the time of the acquisition.
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Income Tax (Earnings and Pensions) Act 2003
United Kingdom · statute
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In force since 2026-07-15, as the publisher states.
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Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.
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Contents: 1,080 provisions
- Title and introductory text
- 1 Overview of contents of this Act
- 2 Abbreviations and general index in Schedule 1
- 3 Structure of employment income Parts
- 4 “Employment” for the purposes of the employment income Parts
- 5 Application to offices and office-holders
- 6 Nature of charge to tax on employment income
- 7 Meaning of “employment income”, “general earnings” and “specific employment income”
- 8 Meaning of “exempt income”
- 9 Amount of employment income charged to tax
- 10 Meaning of “taxable earnings” and “taxable specific income”
- 11 Calculation of “net taxable earnings”
- 12 Calculation of “net taxable specific income”
- 13 Person liable for tax
- 14 Taxable earnings under this Chapter: introduction
- 15 Earnings for year when employee UK resident
- 16 Meaning of earnings “for” a tax year
- 17 Treatment of earnings for year in which employment not held
- 18 Receipt of money earnings
- 19 Receipt of non-money earnings
- 20 Taxable earnings under this Chapter: introduction
- 21 Earnings for year when employee resident and ordinarily resident, but not domiciled, in UK, except chargeable overseas earnings
- 22 Chargeable overseas earnings for year when remittance basis applied and employee outside section 26
- 23 Calculation of “chargeable overseas earnings”
- 24 Limit on chargeable overseas earnings where duties of associated employment performed in UK
- 24A Restrictions on remittance basis
- 24B Definitions of “C” and “I” for the purposes of section 24A(14)
- 25 UK-based earnings for year when employee resident, but not ordinarily resident, in UK
- 26 Foreign earnings for year when remittance basis applied and employee met section 26A requirement
- 26A Section 26: requirement for 3-year period of non-residence
- 27 UK-based earnings for year when employee not resident in UK
- 28 Meaning of “general earnings from overseas Crown employment subject to UK tax”
- 29 Meaning of earnings “for” a tax year
- 30 Treatment of earnings for year in which employment not held
- 38 Earnings for period of absence from employment
- 38A Earnings relating to duties not performed
- 39 Duties in UK merely incidental to duties outside UK
- 40 Duties on board vessel or aircraft
- 41 Employment in UK sector of continental shelf
- 41ZA Basis of apportionment
- 41A Taxable specific income from employment-related securities: effect of remittance basis
- 41B Section 41A: the relevant period
- 41C Section 41A: foreign securities income
- 41D Limit on foreign securities income where duties of associated employment performed in UK
- 41E Foreign securities income: just and reasonable apportionment
- 41F Taxable specific income: internationally mobile employees etc
- 41G Section 41F: the relevant period
- 41H Section 41F: chargeable and unchargeable foreign securities income
- 41I Limit on “chargeable foreign securities income” where duties of associated employment performed in UK
- 41J Location of employment duties
- 41K Securities income from overseas Crown employment
- 41L Chargeable and unchargeable foreign securities income: just and reasonable apportionment
- 41M Foreign employment election for qualifying new residents
- 41N Key definitions
- 41P Claim for relief for qualifying new residents
- 41Q Amount of relief available
- 41R Limit on relief
- 41S Effect of claim on relief for contributions to registered pension schemes
- 41T Foreign employment relief ignored for purposes of determining adjusted net income
- 41U Qualifying foreign general earnings
- 41V Qualifying foreign third party income
- 41W Qualifying foreign securities income
- 41X Meaning of “overseas Crown employment subject to UK tax”
- 41Y Location of employment duties
- 41Z Artificial arrangements to be disregarded
- 41Z1 Limit on qualifying foreign employment income from associated employments
- 43 Appeal against Commissioners' decision on domicile or ordinary residence
- 44 Treatment of workers supplied by agencies
- 45 Arrangements with agencies
- 46 Cases involving unincorporated bodies etc.
- 46A Anti-avoidance
- 47 Interpretation of this Chapter
- 48 Scope of this Chapter
- 49 Engagements to which this Chapter applies
- 50 Worker treated as receiving earnings from employment
- 51 Conditions of liability where intermediary is a company
- 52 Conditions of liability where intermediary is a partnership
- 53 Conditions of liability where intermediary is an individual
- 54 Calculation of deemed employment payment
- 55 Application of rules relating to earnings from employment
- 56 Application of Income Tax Acts in relation to deemed employment
- 57 Earlier date of deemed employment payment in certain cases
- 58 Relief in case of distributions by intermediary
- 59 Provisions applicable to multiple intermediaries
- 60 Meaning of “associate”
- 60A When a company qualifies as small for a tax year
- 60B When a company qualifies as small for a tax year: joint ventures
- 60C When a company qualifies as small for a tax year: subsidiaries
- 60D When a relevant undertaking qualifies as small for a tax year
- 60E When other undertakings qualify as small for a tax year
- 60F When other persons qualify as small for a tax year
- 60G Sections 60A to 60F: connected persons
- 60H Duty on client to state whether it qualifies as small for a tax year
- 60I When a person has a UK connection for a tax year
- 61 Interpretation
- 61A Scope of this Chapter
- 61B Meaning of “managed service company”
- 61C Section 61B: supplementary
- 61D Worker treated as receiving earnings from employment
- 61E Calculation of deemed employment payment
- 61F Sections 61D and 61E: application of rules relating to earnings from employment
- 61G Application of Income Tax Acts in relation to deemed employment
- 61H Relief in case of distributions by managed service company
- 61I Meaning of “associate”
- 61J Interpretation of Chapter
- 61K Scope of this Chapter
- 61L Meaning of “public authority”
- 61M Engagements to which Chapter applies
- 61N Worker treated as receiving earnings from employment
- 61NA Meaning of status determination statement
- 61O Conditions where intermediary is a company
- 61P Conditions where intermediary is a partnership
- 61Q Calculation of deemed direct payment
- 61R Application of Income Tax Acts in relation to deemed employment
- 61S Deductions from chain payments
- 61T Client-led status disagreement process
- 61TA Duty for client to withdraw status determination statement if it ceases to be medium or large
- 61U Information to be provided by worker or intermediary and consequences of failure
- 61V Consequences of providing fraudulent information
- 61W Prevention of double charge to tax and allowance of certain deductions
- 61WA Anti-avoidance
- 61X Interpretation
- 61Y Umbrella companies: joint and several liability
- 61Z Relevant parties
- 61Z1 Purported umbrella companies
- 61Z2 Disclosures to liable persons
- 62 Earnings
- 63 The benefits code
- 64 Relationship between earnings and benefits code
- 65 Dispensations relating to benefits within provisions not applicable to lower-paid employment
- 66 Meaning of “employment” and related expressions
- 67 Meaning of “director” and “full-time working director”
- 68 Meaning of “material interest” in a company
- 69 Extended meaning of “control”
- 69A Optional remuneration arrangements
- 69B Optional remuneration arrangements: supplementary
- 70 Sums in respect of expenses
- 71 Meaning of paid or put at disposal by reason of the employment
- 72 Sums in respect of expenses treated as earnings
- 73 Cash vouchers to which this Chapter applies
- 74 Provision for, or receipt by, member of employee’s family
- 75 Meaning of “cash voucher”
- 76 Sickness benefits-related voucher
- 77 Apportionment of cost of provision of voucher
- 78 Voucher made available to public generally
- 79 Voucher issued under approved scheme
- 80 Vouchers where payment of sums exempt from tax
- 81 Benefit of cash voucher treated as earnings
- 82 Non-cash vouchers to which this Chapter applies
- 83 Provision for, or receipt by, member of employee’s family
- 84 Meaning of “non-cash voucher”
- 85 Non-cash voucher made available to public generally
- 86 Transport vouchers under pre-26th March 1982 arrangements
- 87 Benefit of non-cash voucher treated as earnings
- 87A Benefit of non-cash voucher treated as earnings: optional remuneration arrangements
- 88 Year in which earnings treated as received
- 89 Reduction for meal vouchers
- 90 Credit-tokens to which this Chapter applies
- 91 Provision for, or use by, member of employee’s family
- 92 Meaning of “credit-token”
- 93 Credit-token made available to public generally
- 94 Benefit of credit-token treated as earnings
- 94A Benefit of credit-token treated as earnings: optional remuneration arrangements
- 95 Disregard for money, goods or services obtained
- 96 Dispensations relating to vouchers or credit-tokens
- 96A Power to exempt use of non-cash vouchers or credit-tokens to obtain exempt benefits
- 97 Living accommodation to which this Chapter applies
- 98 Accommodation provided by local authority
- 99 Accommodation provided for performance of duties
- 100 Accommodation provided as result of security threat
- 100A Homes outside UK owned through company etc
- 100B Section 100A(1): exceptions
- 101 Chevening House
- 102 Benefit of living accommodation treated as earnings
- 103 Method of calculating cash equivalent
- 103A Accommodation provided pursuant to optional remuneration arrangements: relevant amount
- 104 General rule for calculating cost of providing accommodation
- 105 Cash equivalent: cost of accommodation not over £75,000
- 105A Lease premiums
- 105B Lease premiums in the case of leases with break clauses
- 106 Cash equivalent: cost of accommodation over £75,000
- 107 Special rule for calculating cost of providing accommodation
- 108 Cash equivalent: accommodation provided for more than one employee
- 109 Priority of this Chapter over Chapter 1 of this Part
- 110 Meaning of “annual value”
- 111 Disputes as to annual value
- 112 Meaning of “person involved in providing the accommodation”
- 113 Meaning of “the property”
- 114 Cars, vans and related benefits
- 115 Meaning of “car” and “van”
- 116 Meaning of when car or van is available to employee
- 117 Meaning of car or van made available by reason of employment
- 118 Availability for private use
- 119 Where alternative to benefit of low emission car or van offered
- 120 Benefit of car treated as earnings
- 120A Benefit of car treated as earnings: optional remuneration arrangements
- 121 Method of calculating the cash equivalent of the benefit of a car
- 121A Optional remuneration arrangements: method of calculating relevant amount
- 121B Meaning of “modified cash equivalent”
- 122 The price of the car
- 123 The list price of a car
- 124 The notional price of a car with no list price
- 124A Automatic car for a disabled employee
- 125 Meaning of “accessory” and related terms
- 125A Security features not to be regarded as accessories
- 126 Amounts taken into account in respect of accessories
- 127 The list price of an accessory
- 128 Accessory: published price of the car manufacturer etc.
- 129 Accessory: published price of the accessory manufacturer etc.
- 130 The notional price of an accessory
- 131 Replacement accessories
- 132 Capital contributions by employee
- 132A Capital contributions by employee: optional remuneration arrangements
- 133 How to determine the “appropriate percentage”
- 134 Meaning of car with or without a CO2 emissions figure
- 135 Car with a CO2 emissions figure: pre-October 1999 registration
- 136 Car with a CO2 emissions figure: registration from 1st October 1999 to IP completion day
- 136A Car with a CO2 emissions figure: registration on or after IP completion day
- 137 Car with a CO2 emissions figure: bi-fuel cars : registration from 1st January 2000 to IP completion day
- 137A Car with a CO2 emissions figure: bi-fuel cars registered on or after IP completion day
- 138 Car with a CO2 emissions figure: automatic car for a disabled employee
- 138A Certain cars with a CO2 emissions figure and an electric range figure
- 139 Cars with a CO2 emissions figure: the appropriate percentage
- 140 Car without a CO2 emissions figure: the appropriate percentage
- 141 Diesel cars: the appropriate percentage
- 142 Car first registered before 1st January 1998: the appropriate percentage
- 143 Deduction for periods when car unavailable
- 144 Deduction for payments for private use
- 145 Modification of provisions where car temporarily replaced
- 146 Cars that run on road fuel gas
- 147 Classic cars: 15 years of age or more
- 147A Classic cars: optional remuneration arrangements
- 148 Reduction of cash equivalent where car is shared
- 149 Benefit of car fuel treated as earnings
- 149A Benefit of car fuel treated as earnings: optional remuneration arrangements
- 150 Car fuel: calculating the cash equivalent
- 151 Car fuel: nil cash equivalent
- 152 Car fuel: proportionate reduction of cash equivalent
- 153 Car fuel: reduction of cash equivalent
- 154 Benefit of van treated as earnings
- 154A Benefit of van treated as earnings: optional remuneration arrangements
- 155 Cash equivalent of the benefit of a van
- 156 Meaning of “shared van”
- 157 Reduction of cash equivalent where van is shared
- 158 Reduction for payments for private use
- 158A Van provided pursuant to optional remuneration arrangements: private use
- 159 Modification of provisions where van temporarily replaced
- 160 Benefit of van fuel treated as earnings
- 160A Benefit of van fuel treated as earnings: optional remuneration arrangements
- 161 Van fuel: the cash equivalent
- 162 Van fuel: nil cash equivalent
- 163 Van fuel: proportionate reduction of cash equivalent
- 164 Van fuel: reduction of cash equivalent
- 167 Pooled cars
- 168 Pooled vans
- 169 Car available to more than one member of family or household employed by same employer
- 169A Van available to more than one member of family or household employed by same employer
- 170 Orders etc. relating to this Chapter
- 171 Minor definitions: general
- 172 Minor definitions: equipment to enable a disabled person to use a car
- 173 Loans to which this Chapter applies
- 173A Alternative finance arrangements
- 174 Employment-related loans
- 175 Benefit of taxable cheap loan treated as earnings
- 175A Optional remuneration arrangements: “relevant amount” and “modified cash equivalent”
- 176 Exception for loans on ordinary commercial terms
- 177 Exceptions for loans at fixed rate of interest
- 178 Exception for loans where interest qualifies for tax relief
- 179 Exception for certain advances for necessary expenses
- 180 Threshold for benefit of loan to be treated as earnings
- 181 The official rate of interest
- 182 Normal method of calculation: averaging
- 183 Alternative method of calculation
- 184 Interest treated as paid
- 185 Apportionment of cash equivalent in case of joint loan etc.
- 186 Replacement loans
- 187 Aggregation of loans by close company to director
- 188 Loan released or written off: amount treated as earnings
- 189 Exception where double charge
- 190 Exclusion of charge after death of employee
- 191 Claim for relief to take account of event after assessment
- 201 Employment-related benefits
- 202 Excluded benefits
- 203 Cash equivalent of benefit treated as earnings
- 203A Employment-related benefit provided under optional remuneration arrangements
- 204 Cost of the benefit: basic rule
- 205 Cost of the benefit: asset made available without transfer
- 205A Deduction for periods when asset unavailable for private use
- 205B Reduction of cost of taxable benefit where asset is shared
- 206 Cost of the benefit: transfer of used or depreciated asset
- 207 Meaning of “annual rental value”
- 208 Meaning of “market value”
- 209 Meaning of “persons providing benefit”
- 210 Power to exempt minor benefits
- 211 Special rules for scholarships: introduction
- 212 Scholarships provided under arrangements entered into by employer or connected person
- 213 Exception for certain scholarships under trusts or schemes
- 214 Scholarships: cost of the benefit
- 215 Limitation of exemption for scholarship income in section 776(1) of ITTOIA 2005
- 221 Payments where employee absent because of sickness or disability
- 222 Payments by employer on account of tax where deduction not possible
- 223 Payments on account of director’s tax other than by the director
- 224 Payments to non-approved personal pension arrangements
- 225 Payments for restrictive undertakings
- 226 Valuable consideration given for restrictive undertakings
- 226A Amount treated as earnings
- 226C Only one payment deemed to be made under associated agreements
- 226E Sporting testimonial payments
- 227 Scope of Part 4
- 228 Effect of exemptions on liability under provisions outside Part 2
- 228A General exclusion from exemptions: optional remuneration arrangements
- 229 Mileage allowance payments
- 230 The approved amount for mileage allowance payments
- 231 Mileage allowance relief
- 232 Giving effect to mileage allowance relief
- 233 Passenger payments
- 234 The approved amount for passenger payments
- 235 Vehicles to which this Chapter applies
- 235A Journeys made by members of local authorities etc
- 236 Interpretation of this Chapter
- 237 Parking provision and expenses
- 237A Vehicle-battery charging
- 238 Modest private use of heavy goods vehicles
- 239 Payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles
- 240 Incidental overnight expenses and benefits
- 241 Incidental overnight expenses and benefits: overall exemption limit
- 241A Travel by unpaid directors of not-for-profit companies
- 241B Travel where directorship held as part of trade or profession
- 242 Works transport services
- 243 Support for public bus services
- 244 Cycles and cyclist’s safety equipment
- 245 Travelling and subsistence during public transport strikes
- 246 Transport between work and home for disabled employees: general
- 247 Provision of cars for disabled employees
- 248 Transport home: late night working and failure of car-sharing arrangements
- 248A Emergency vehicles
- 249 Interpretation of this Chapter
- 250 Exemption of work-related training provision
- 251 Meaning of “work-related training”
- 252 Exception for non-deductible travel expenses
- 253 Exception where provision for excluded purposes
- 254 Exception where unrelated assets are provided
- 254A Apprenticeship bursaries paid to persons leaving local authority care
- 255 Exemption for contributions to individual learning account training
- 256 Meaning of “individual learning account training”
- 257 Exception for non-deductible travel expenses
- 258 Exception where provision for excluded purposes
- 259 Exception where unrelated assets are provided
- 260 Exception where training not generally available to staff
- 261 Exemption of recreational benefits
- 262 Benefits not exempted by section 261
- 263 Power to alter benefits to which section 261 applies
- 264 Annual parties and functions
- 265 Third party entertainment
- 266 Exemption of non-cash vouchers for exempt benefits
- 267 Exemption of credit-tokens used for exempt benefits
- 268 Exemption of vouchers and tokens for incidental overnight expenses
- 269 Exemption where benefits or money obtained in connection with taxable car or van or exempt heavy goods vehicle
- 270 Exemption for small gifts of vouchers and tokens from third parties
- 270A Limited exemption for qualifying childcare vouchers
- 270AA Meaning of “eligible employee”
- 270B Meaning of “relevant earnings amount” and “required time”
- 271 Limited exemption of removal benefits and expenses: general
- 272 Removal benefits and expenses to which section 271 applies
- 273 Conditions applicable to change of residence
- 274 Meaning of “the limitation day”
- 275 Meaning of “the employment change”
- 276 Meaning of “residence”, “former residence” and “new residence” etc.
- 277 Acquisition benefits and expenses
- 278 Abortive acquisition benefits and expenses
- 279 Disposal benefits and expenses
- 280 Transporting belongings
- 281 Travelling and subsistence
- 282 Exclusion from section 281 of benefits and expenses where deduction allowed
- 283 Exclusion from section 281 of taxable car and van facilities
- 284 Bridging loan expenses
- 285 Replacement of domestic goods
- 286 Power to amend sections 277 to 285
- 287 Limit on exemption
- 288 Limited exemption of certain bridging loans connected with employment moves
- 289 Relief for certain bridging loans not qualifying for exemption under section 288
- 289A Exemption for paid or reimbursed expenses
- 289B Approval to pay or reimburse expenses at a flat rate
- 289C Revocation of approvals
- 289D Exemption for other benefits
- 289E Anti-avoidance
- 290 Accommodation benefits of ministers of religion
- 290A Accommodation outgoings of lower-paid ministers of religion
- 290B Allowances paid to lower-paid ministers of religion in respect of accommodation outgoings
- 290C Provisions of benefits code not applicable to lower-paid ministers of religion
- 290D Meaning of “lower-paid employment as a minister of religion”
- 290E Calculation of earnings rate for a tax year
- 290F Extra amounts to be added in connection with a car
- 290G Related employments
- 291 Termination payments to MPs and others ceasing to hold office
- 292 Accommodation expenses of MPs
- 293 Overnight expenses of other elected representatives
- 293A UK travel and subsistence expenses of MPs
- 293B UK travel expenses of other elected representatives
- 294 European travel expenses of MPs and other representatives
- 295 Transport and subsistence for Government ministers etc.
- 295A Travel expenses of members of local authorities etc
- 296 Armed forces' leave travel facilities
- 297 Armed forces' food, drink and mess allowances
- 297A Armed forces: the Operational Allowance
- 297B Armed forces: the Council Tax Relief
- 297C Armed forces: Continuity of Education Allowance
- 297D Armed forces: accommodation allowances
- 298 Reserve and auxiliary forces' training allowances
- 299 Crown employees' foreign service allowances
- 299A Voluntary office-holders: compensation for lost employment income
- 299B Voluntary office-holders: payments in respect of expenses
- 300 Consuls
- 301 Official agents
- 302 Consular employees
- 303 Visiting forces etc
- 304 Experts seconded to European Commission
- 304A Experts seconded to other European Union bodies
- 305 Offshore oil and gas workers: mainland transfers
- 306 Miners etc: coal and allowances in lieu of coal
- 306A Carers: board and lodging
- 306B Limited exemption for sporting testimonial payments
- 307 Death or retirement benefit provision
- 308 Exemption of contributions to registered pension scheme
- 308A Exemption of contributions to overseas pension scheme
- 308B Independent advice in respect of conversions and transfers of pension scheme benefits
- 308C Provision of pensions advice: limited exemption
- 309 Limited exemptions for statutory redundancy payments
- 310 Counselling and other outplacement services
- 311 Retraining courses
- 312 Recovery of tax
- 312A Limited exemption for qualifying bonus payments
- 312B “Qualifying bonus payments”
- 312C Section 312B: the participation and equality requirements
- 312D Section 312B: the trading requirement
- 312E Section 312B: the indirect employee-ownership requirement
- 312F Section 312B: the office-holder requirement
- 312G “Service company”
- 312H Excluded payments
- 312I Interpretation of Chapter 10A
- 313 Repairs and alterations to living accommodation
- 314 Council tax etc. paid for certain living accommodation
- 315 Limited exemption for expenses connected with certain living accommodation
- 316 Accommodation, supplies and services used in employment duties
- 316ZA Accommodation, supplies and services used in employment duties: payment or reimbursement of expenses
- 316A Homeworker’s additional household expenses
- 317 Subsidised meals
- 318 Childcare: exemption for employer-provided care
- 318A Childcare: limited exemption for other care
- 318AZA Meaning of “eligible employee”
- 318AA Meaning of “relevant earnings amount” and “required time”
- 318B Childcare: meaning of “care”, “child” and “parental responsibility”
- 318C Childcare: meaning of “qualifying child care”
- 318D Childcare: power to vary amounts which are the exempt amount and qualifying conditions
- 319 Mobile telephones
- 320 Limited exemption for computer equipment
- 320A Eye tests and special corrective appliances
- 320B Health-screening and medical check-ups
- 320C Recommended medical treatment
- 320D Flu vaccinations
- 321 Suggestion awards
- 322 Suggestion awards: “the permitted maximum”
- 323 Long service awards
- 323A Trivial benefits provided by employers
- 323B Section 323A: calculation of available exempt amount
- 323C Power to amend sections 323A and 323B
- 324 Small gifts from third parties
- 325 Overseas medical treatment
- 325A Health and employment insurance payments
- 326 Expenses incidental to transfer of a kind not normally met by transferor
- 326A Fees relating to monitoring schemes relating to vulnerable persons
- 326B Advice relating to proposed employee shareholder agreements
- 327 Deductions from earnings: general
- 328 The income from which deductions may be made
- 329 Deductions from earnings not to exceed earnings
- 330 Prevention of double deductions
- 331 Order for making deductions
- 332 Meaning of “the deductibility provisions”
- 333 Scope of this Chapter: expenses paid by the employee
- 334 Effect of reimbursement etc.
- 335 Application of deductions provisions: “earnings charged on receipt” and “earnings charged on remittance”
- 336 Deductions for expenses: the general rule
- 337 Travel in performance of duties
- 338 Travel for necessary attendance
- 339 Meaning of “workplace” and “permanent workplace”
- 339A Travel for necessary attendance: employment intermediaries
- 340 Travel between group employments
- 340A Travel between linked employments
- 341 Travel at start or finish of overseas employment
- 342 Travel between employments where duties performed abroad
- 343 Deduction for professional membership fees
- 344 Deduction for annual subscriptions
- 345 Decisions of an officer of Revenue and Customs under section 344
- 346 Deduction for employee liabilities and expenses
- 347 Payments made after leaving the employment
- 348 Liabilities related to the employment
- 349 Meaning of “qualifying insurance contract”
- 350 Connected contracts
- 351 Expenses of ministers of religion
- 352 Limited deduction for agency fees paid by entertainers
- 353 Deductions from earnings charged on remittance
- 354 Disallowance of expenses relating to earnings taxed on different basis or untaxed
- 355 Deductions for corresponding payments by qualifying new resident employees with foreign employers
- 356 Disallowance of business entertainment and gifts expenses
- 357 Business entertainment and gifts: exception where employer’s expenses disallowed
- 358 Business entertainment and gifts: other exceptions
- 359 Disallowance of travel expenses: mileage allowances and reliefs
- 360 Disallowance of certain accommodation expenses of MPs and other representatives
- 360A Social security contributions
- 360B Additional household expenses
- 361 Scope of this Chapter: cost of benefits deductible as if paid by employee
- 362 Deductions where non-cash voucher provided
- 363 Deductions where credit-token provided
- 364 Deductions where living accommodation provided
- 365 Deductions where certain employment-related benefits provided
- 366 Scope of this Chapter: amounts fixed by Treasury
- 367 Fixed sum deductions for repairing and maintaining work equipment
- 368 Fixed sum deductions from earnings payable out of public revenue
- 369 Scope of this Chapter: earnings representing benefits or reimbursed expenses
- 370 Travel costs and expenses where duties performed abroad: employee’s travel
- 371 Travel costs and expenses where duties performed abroad: visiting spouse’s , civil partner's or child’s travel
- 372 Where seafarers' duties are performed
- 373 Non-resident or qualifying new resident employee’s travel costs and expenses where duties performed in UK
- 374 Non-resident or qualifying new resident employee’s spouse’s , civil partner's or child’s travel costs and expenses where duties performed in UK
- 375 Meaning of “qualifying arrival date”
- 376 Foreign accommodation and subsistence costs and expenses (overseas employments)
- 377 Costs and expenses in respect of personal security assets and services
- 378 Deduction from seafarers' earnings: eligibility
- 379 Calculating the deduction
- 380 Limit on deduction where UK duties etc. make amount unreasonable
- 381 Taking account of other deductions
- 382 Duties on board ship
- 383 Place of performance of incidental duties
- 384 Meaning of employment “as a seafarer”
- 385 Meaning of “ship”
- 393 Application of this Chapter
- 393A Employer-financed retirement benefits scheme
- 393B Relevant benefits
- 394 Charge on benefit to which this Chapter applies
- 394A Temporary non-residents
- 395 Reduction where employee has contributed
- 395A Benefits under old section 222 schemes not taxed by virtue of section 394
- 395B Exemption or reduction for foreign service
- 395C Meaning of “foreign service” in section 395B
- 396 Certain lump sums not taxed by virtue of section 394
- 397 Certain lump sums: calculation of amount taxed by virtue of section 394
- 398 Valuation of benefits
- 399 Employment-related loans: interest treated as paid
- 399A Responsible person
- 400 Interpretation
- 401 Application of this Chapter
- 402 Meaning of “benefit”
- 402A Split of payments and other benefits between sections 402B and 403
- 402B Termination awards not benefiting from threshold to be treated as earnings
- 402C The termination awards to which section 402B applies
- 402D “Post-employment notice pay”
- 402E Meaning of “trigger date” and “post-employment notice period” in section 402D
- 403 Charge on payment or other benefit where threshold applies
- 404 How the £30,000 threshold applies
- 404A Amounts charged to be treated as highest part of total income
- 404B Power to vary threshold
- 405 Exception for certain payments exempted when received as earnings
- 406 Exception for death or disability payments and benefits
- 407 Exception for payments and benefits under tax-exempt pension schemes
- 408 Exception for contributions to registered pension schemes
- 409 Exception for payments and benefits in respect of certain legal expenses etc and indemnity insurance
- 410 Exception for payments and benefits in respect of certain legal expenses etc and indemnity insurance: individual deceased
- 411 Exception for payments and benefits for forces
- 412 Exception for payments and benefits provided by foreign governments etc.
- 413 Exception in certain cases of foreign service
- 413A Exception for payment of certain legal costs
- 414 Reduction in other cases of foreign service
- 414A Exception for payments and benefits under section 615(3) schemes
- 414B Exception in certain cases of foreign service as seafarer
- 414C Reduction in other cases of foreign service as seafarer
- 415 Valuation of benefits
- 416 Notional interest treated as paid if amount charged for beneficial loan
- 417 Scope of Part 7
- 418 Other related provisions
- 419 Negative amounts treated as nil
- 420 Meaning of “securities” etc
- 421 Meaning of “market value” etc
- 421A Meaning of “consideration”
- 421B Application of Chapters 2 to 4A
- 421C Associated persons
- 421D Replacement and additional securities and changes in interests
- 421E Exclusions: residence etc
- 421F Exclusions: public offers
- 421G Exclusions: approved plan or scheme securities
- 421H Meaning of “employee-controlled” etc
- 421I Consideration for acquisition of employment-related securities
- 421J Duty to provide information
- 421JA Annual returns
- 421JB Returns to be given electronically
- 421JC Penalties for late returns
- 421JD Penalty if information not given correctly
- 421JE Assessment of penalties
- 421JF Appeals
- 421K Reportable events
- 421L Persons to whom section 421J applies
- 422 Application of this Chapter
- 423 “Restricted securities” and “restricted interest in securities”
- 424 Exceptions
- 425 No charge in respect of acquisition in certain cases
- 426 Charge on occurrence of chargeable event
- 427 Chargeable events
- 428 Amount of charge
- 428A Relief for secondary Class 1 contributions met by employee
- 429 Case outside charge under section 426
- 430 Election for outstanding restrictions to be ignored
- 430A Application of this Chapter where securities exchanged for further securities
- 431 Election for full or partial disapplication of this Chapter
- 431A Shares under tax advantaged plan or scheme
- 431B Securities acquired for purpose of avoidance
- 432 Definitions
- 435 Application of this Chapter
- 436 “Convertible securities”
- 437 Adjustment of charge
- 438 Charge on occurrence of chargeable event
- 439 Chargeable events
- 440 Amount of charge
- 441 Amount of gain realised on occurrence of chargeable event
- 442 Amount of consideration given for entitlement to convert
- 442A Relief for secondary Class 1 contributions met by employee
- 443 Case outside charge under section 438
- 444 Definitions
- 446A Application of this Chapter
- 446B Charge on acquisition
- 446C Amount of charge
- 446D Restricted securities and convertible securities
- 446E Charge on restricted securities
- 446F Adjustment of market value: conditional interests
- 446G Adjustment of market value: consideration for entitlement to convert
- 446H Adjustment of market value: charge on conversion
- 446I Adjustment of consideration or benefit received
- 446IA Disapplication of exceptions from charges
- 446J Definitions
- 446K Application of this Chapter
- 446L Charge on non-commercial increases
- 446M Securities subject to restriction on valuation date
- 446N Securities subject to restriction during relevant period
- 446NA Disapplication of exceptions from charges
- 446O “Relevant period” and “valuation date”
- 446P Definitions
- 446Q Application of this Chapter
- 446R Case outside this Chapter
- 446S Notional loan
- 446T Amount of notional loan
- 446U Discharge of notional loan
- 446UA Pre-acquisition avoidance cases
- 446V Chapter to be additional to other income tax charges
- 446W Definitions
- 446X Application of this Chapter
- 446Y Amount treated as income
- 446Z Definitions
- 447 Charge on other chargeable benefits from securities
- 448 Amount of charge
- 449 Case outside this Chapter
- 450 Definitions
- 451 Amount of charge
- 452 Cases outside charge under section 449
- 453 Charge on increase in value of shares of dependent subsidiary
- 454 Chargeable increases
- 455 Amount of charge
- 456 Cases outside charge under section 453
- 457 Charge on other chargeable benefits from shares
- 458 Chargeable benefits
- 459 Amount of charge
- 460 Cases outside charge under section 457
- 461 Related acquisitions of additional shares
- 462 Company reorganisations etc.
- 463 Disposals of shares to connected persons etc. ignored
- 464 Application to interests in shares
- 465 Duty to notify acquisitions of shares or interests in shares
- 466 Duty to notify chargeable events and chargeable benefits
- 467 Meaning of “dependent subsidiary”
- 468 Meaning of “employee-controlled”
- 469 Shares “held by outside shareholders”
- 470 Minor definitions
- 451 Application of this Chapter
- 452 Market value on acquisition
- 453 Taxable amount under Chapter 4
- 454 Deemed election for disapplication of Chapter 2
- 455 Disapplication of Chapter 3B
- 456 Meaning of “intellectual property” and “transfer”
- 457 Meaning of “research institution”
- 458 Meaning of “involved in research”
- 459 Transfer of intellectual property by controlled company
- 460 Definitions
- 471 Options to which this Chapter applies
- 472 Associated persons
- 473 Introduction to taxation of securities options
- 474 Cases where this Chapter does not apply
- 475 No charge in respect of acquisition of option
- 476 Charge on occurrence of chargeable event
- 477 Chargeable events
- 478 Amount of charge
- 479 Amount of gain realised on occurrence of chargeable event
- 480 Deductible amounts
- 481 Relief for secondary Class 1 contributions met by employee
- 482 Relief for special contribution met by employee
- 483 Application of this Chapter where option exchanged for another
- 484 Definitions
- 485 Application of this Chapter where share option exchanged for another
- 486 Duty to notify matters relating to share options
- 487 Minor definitions
- 488 ... Share incentive plans (SIPs)
- 489 Operation of tax advantages in connection with Schedule 2 SIP
- 490 No charge on award or acquisition of shares: general
- 491 No charge on award of shares as taxable benefit
- 492 No charge on partnership share money deducted from salary
- 493 No charge on acquisition of dividend shares
- 494 No charge on removal of restrictions applying to shares
- 495 No charge on increase in value of shares of dependent subsidiary
- 496 No charge on cash dividend retained for reinvestment
- 497 Limitations on charges on shares ceasing to be subject to plan
- 498 No charge on shares ceasing to be subject to plan in certain circumstances
- 499 No charge in respect of incidental expenditure
- 500 Operation of tax charges in connection with Schedule 2 SIP
- 501 Charge on capital receipts in respect of plan shares
- 502 Meaning of “capital receipt” in section 501
- 503 Charge on partnership share money paid over to employee
- 504 Charge on cancellation payments in respect of partnership share agreement
- 505 Charge on free or matching shares ceasing to be subject to plan
- 506 Charge on partnership shares ceasing to be subject to plan
- 507 Charge on disposal of beneficial interest during holding period
- 508 Identification of shares ceasing to be subject to plan
- 509 Modification of section 696 where charge on shares ceasing to be subject to plan
- 510 Payments by trustees to employer company on shares ceasing to be subject to plan
- 511 PAYE deductions to be made by trustees on shares ceasing to be subject to plan
- 512 Disposal of beneficial interest by participant
- 513 Capital receipts: payments by trustees to employer company
- 514 Capital receipts: PAYE deductions to be made by trustees
- 515 Tax advantages and charges under other Acts
- 516 ... SAYE option schemes
- 517 Share options to which this Chapter applies
- 518 No charge in respect of receipt of option
- 519 No charge in respect of exercise of option
- 520 No charge in respect of post-acquisition benefits
- 521 ... CSOP schemes
- 522 Share options to which this Chapter applies
- 523 No charge in respect of receipt of option
- 524 No charge in respect of receipt of option
- 525 No charge in respect of post-acquisition benefits
- 526 Charge where option granted at a discount
- 527 Enterprise management incentives: qualifying options
- 528 No charge on receipt of qualifying option
- 529 Scope of tax advantages: option must be exercised by the specified anniversary
- 530 No charge on exercise of option to acquire shares at market value
- 531 Limitation of charge on exercise of option to acquire shares below market value
- 532 Modified tax consequences following disqualifying events
- 533 Disqualifying events
- 534 Disqualifying events relating to relevant company
- 535 Disqualifying events relating to employee
- 536 Other disqualifying events
- 537 Alterations of share capital for purposes of section 536
- 538 Share conversions excluded for purposes of section 536
- 539 CSOP and other options relevant for purposes of section 536
- 540 No charge on acquisition of shares as taxable benefit
- 541 Effects on other income tax charges
- 542 Exemption: offer made to public and employees
- 543 Discount not covered by exemption in section 542
- 544 Exemption: different offers made to public and employees
- 545 Discount not covered by exemption in section 544
- 546 Meaning of being entitled “on similar terms”
- 547 Meaning and amount or value of “registrant discount”
- 548 Minor definitions
- 549 Application of this Chapter
- 550 Meaning of “employee benefit trust”
- 551 “Qualifying disposals” for purposes of section 550
- 552 Attribution of interest in company to beneficiary or associate
- 553 Meaning of “appropriate percentage” for purposes of section 552
- 554 Attribution of further interest in company
- 554A Application of Chapter 2 : main case
- 554AA Application of Chapter 2: close companies
- 554AB Meaning of “relevant transaction”
- 554AC Meaning of “excluded transaction”
- 554AD Section 554AA: meaning of “director”
- 554AE Section 554AA: meaning of “material interest”
- 554AF Section 554AA: supplementary
- 554B Relevant steps: earmarking etc of sum of money or asset
- 554C Relevant steps: payment of sum, transfer of asset etc
- 554D Relevant steps: making asset available
- 554E Exclusions: steps under certain schemes etc
- 554F Exclusions: commercial transactions
- 554G Exclusions: transactions under employee benefit packages
- 554H Exclusions: earmarking of deferred remuneration
- 554I Exclusions: introduction to sections 554J to 554M
- 554J Exclusions: earmarking for employee share schemes (1)
- 554K Exclusions: earmarking for employee share schemes (2)
- 554L Exclusions: earmarking for employee share schemes (3)
- 554M Exclusions: earmarking for employee share schemes (4)
- 554N Exclusions: other cases involving employment-related securities etc
- 554O Exclusions: employee car ownership schemes
- 554OA Exclusions: transfer of employment-related loans
- 554P Exclusions: employment income exemptions under Part 4
- 554Q Exclusions: income arising from earmarked sum or asset
- 554R Exclusions: acquisitions out of sums or assets
- 554RA Exclusions: relevant repayments
- 554S Exclusions: pension income chargeable under Part 9 etc
- 554T Exclusions: employee pension contributions
- 554U Exclusions: pre-6 April 2006 contributions to employer-financed retirement benefit schemes
- 554V Exclusions: purchases of annuities out of pension scheme rights
- 554W Exclusions: certain retirement benefits etc
- 554X Exclusions: transfers between certain foreign pension schemes
- 554XA Exclusions: payments in respect of a tax liability
- 554Y Power to exclude other relevant steps
- 554Z Interpretation: general
- 554Z1 Interpretation: persons linked with A
- 554Z2 Value of relevant step to count as employment income
- 554Z2A Exception to section 554Z2(1): close companies
- 554Z3 Value of relevant step
- 554Z4 Residence issues
- 554Z4A Temporary non-residents
- 554Z5 Overlap with money or asset subject to earlier tax liability
- 554Z6 Overlap with certain earnings
- 554Z7 Exercise price of share options
- 554Z8 Cases where consideration given for relevant step
- 554Z9 Remittance basis: A did not meet section 26A requirement
- 554Z10 Remittance basis: A met section 26A requirement
- 554Z11 Remittance basis: supplementary
- 554Z11A Temporary non-residents
- 554Z11B Earlier income tax liability: application of section 554Z11C
- 554Z11C Earlier income tax liability: treatment of payments
- 554Z11D Earlier income tax liability: provisional payments of tax
- 554Z11E Application for provisional payments to be treated as payment of tax
- 554Z11F Provisional payments of tax: further provision
- 554Z11G Earlier income tax liability: supplementary provision
- 554Z12 Relevant step taken after A's death etc
- 554Z13 Subsequent income tax liability
- 554Z14 Relief where earmarking not followed by further relevant step
- 554Z15 Location of employment duties
- 554Z16 Application etc
- 554Z17 Employer etc to be treated as relevant third person etc
- 554Z18 Earmarking etc
- 554Z19 Provision of security
- 554Z20 Valuation of step within section 554Z19
- 554Z21 Relief for earmarking or security not followed by contribution or relevant benefit
- 555 Former employee entitled to deduction in calculating net income
- 556 Deductible payments made outside the time limits allowed
- 556A Deductible payments made pursuant to tax avoidance arrangements
- 557 Deductible payments wholly or partly borne by the former employer etc.
- 558 Meaning of “deductible payment”
- 559 Liabilities related to the former employment
- 560 Meaning of “qualifying insurance contract”
- 561 Connected contracts
- 562 Meaning of “former employee” and “employment”
- 563 Other interpretation
- 564 Application of this Part to office-holders
- 565 Structure of Part 9
- 566 Nature of charge to tax on pension income and relevant definitions
- 567 Amount charged to tax
- 567A Cases in which Part 7A has applied to source of pension income
- 567B Cases where inheritance tax is paid in respect of pension death benefit
- 568 Person liable for tax
- 569 United Kingdom pensions
- 570 “Pension”: interpretation
- 571 Taxable pension income
- 572 Person liable for tax
- 572A Temporary non-residents
- 573 Foreign pensions
- 574 “Pension”: interpretation
- 574A “Pension”: relevant lump sums
- 575 Taxable pension income
- 576 Person liable for tax
- 576A Temporary non-residents
- 577 United Kingdom social security pensions
- 578 Taxable pension income
- 579 Person liable for tax
- 579A Pensions
- 579B Taxable pension income
- 579C Person liable for tax
- 579CZA Exemption for beneficiaries' income withdrawal in some cases
- 579CA Temporary non-residents
- 579CB Refund of overpaid inheritance tax treated as pension
- 579D Interpretation
- 590 Annuities
- 591 Taxable pension income
- 592 Person liable for tax
- 593 Unauthorised payments: application of section 583
- 594 Meaning of “former approved superannuation fund”
- 595 Annuities
- 596 Taxable pension income
- 597 Person liable for tax
- 598 Income withdrawals
- 599 Taxable pension income
- 600 Person liable for tax
- 601 Unauthorised personal pension payments
- 602 Taxable pension income
- 603 Person liable for tax
- 604 Meaning of “personal pension scheme” and related expressions
- 605 Annuities
- 606 Meaning of “retirement annuity contract”
- 607 Taxable pension income
- 608 Person liable for tax
- 609 Annuities for the benefit of dependants
- 610 Annuities under non-registered occupational pension schemes
- 611 Annuities in recognition of another’s services
- 611A Exemptions from sections 609 to 611
- 612 Taxable pension income: UK annuities
- 613 Taxable pension income: foreign annuities
- 614 Person liable for tax
- 615 Certain overseas government pensions paid in the United Kingdom
- 616 Taxable pension income
- 617 Deduction allowed from taxable pension income
- 618 Person liable for tax
- 619 The House of Commons Members' Fund
- 620 Meaning of “House of Commons Members' Fund”
- 621 Taxable pension income
- 622 Person liable for tax
- 623 Return of surplus employee additional voluntary contributions
- 624 Taxable pension income
- 625 Person liable for tax
- 626 Income tax treated as paid
- 627 Meaning of “grossing up”
- 628 Interpretation
- 629 Pre-1973 pensions paid under the Overseas Pensions Act 1973
- 630 Interpretation
- 631 Taxable pension income
- 632 Person liable for tax
- 633 Voluntary annual payments
- 634 Taxable pension income: UK voluntary annual payments
- 635 Taxable pension income: foreign voluntary annual payments
- 636 Person liable for tax
- 636A Exemptions and liabilities for certain lump sums under registered pension schemes
- 636AA Taxable lump sum death benefits
- 636B Trivial commutation and winding-up lump sums
- 636C Trivial commutation and winding-up lump sum death benefits
- 637 Introduction
- 637A Pension commencement lump sums
- 637B Pension commencement excess lump sums
- 637C Serious ill-health lump sums
- 637D Uncrystallised funds pension lump sums
- 637E Short service refund lump sum
- 637F Refund of excess contributions lump sums
- 637G Trivial commutation lump sums and winding-up lump sums
- 637H Defined benefits lump sum death benefits
- 637I Pension protection lump sum death benefits
- 637J Uncrystallised funds lump sum death benefits
- 637K Annuity protection lump sum death benefits
- 637L Drawdown pension fund lump sum death benefits
- 637M Flexi-access drawdown lump sum death benefits
- 637N Trivial commutation lump sum death benefits
- 637P Individual’s lump sum allowance
- 637Q Availability of individual’s lump sum allowance
- 637R Individual’s lump sum and death benefit allowance
- 637S Availability of individual’s lump sum and death benefit allowance
- 637T Availability of individual’s lump sum and death benefit allowance where multiple lump sum death benefits paid
- 637U Availability of individual’s allowances where lump sums or lump sum death benefits already paid by non-UK schemes
- 638 Awards for bravery
- 639 Pensions in respect of death due to military or war service
- 640 Exemption under section 639 where income withheld
- 640A Lump sums provided under armed forces early departure scheme
- 641 Wounds and disability pensions
- 642 Compensation for National-Socialist persecution
- 642A Netherlands Benefit Act for Victims of Persecution 1940-1945
- 643 Malawi, Trinidad and Tobago and Zambia government pensions
- 644 Pensions payable where employment ceased due to disablement
- 644A Health and employment insurance payments
- 645 Social security pensions: increases in respect of children
- 646 Former miners etc: coal and allowances in lieu of coal
- 646A Foreign pensions of consular employees
- 646B Registered schemes: beneficiaries' annuities from unused funds
- 646C Registered schemes: beneficiaries' annuities from drawdown funds
- 646D Non-registered schemes: beneficiaries' annuities from unused funds
- 646E Non-registered schemes: beneficiaries' annuities from drawdown funds
- 646F Interpretation of sections 646B to 646E
- 647 Introduction and meaning of “foreign residence condition” etc.
- 648 The Central African Pension Fund
- 649 Commonwealth government pensions
- 650 Oversea Superannuation Scheme
- 651 Overseas Pensions Act 1973
- 652 Overseas Service Act 1958
- 653 Overseas Service Pensions Fund
- 654 The Pensions (India, Pakistan and Burma) Act 1955
- 655 Structure of Part 10
- 656 Nature of charge to tax on social security income
- 657 Meaning of “social security income”, “taxable benefits” etc.
- 658 Amount charged to tax
- 659 Person liable for tax
- 660 Taxable benefits: UK benefits – Table A
- 661 Taxable social security income
- 662 Person liable for tax
- 663 Long-term incapacity benefit: previous entitlement to invalidity benefit
- 664 Short-term incapacity benefit not payable at the higher rate
- 665 Exempt unless payable to a person involved in a trade dispute
- 666 Child maintenance bonus
- 667 Amounts in excess of taxable maximum
- 668 Taxable maximum
- 669 Interpretation
- 670 Child maintenance bonus
- 671 Amounts in excess of taxable maximum
- 672 Taxable maximum: general
- 673 Taxable maximum: income-based jobseeker’s allowance
- 674 Taxable maximum: contribution-based jobseeker’s allowance
- 675 Interpretation
- 676 Increases in respect of children
- 677 UK social security benefits wholly exempt from tax: Table B
- 678 Taxable benefits: foreign benefits
- 679 Taxable social security income
- 680 Person liable for tax
- 681 Taxable and other foreign benefits: exemptions
- 681A Foreign benefits of consular employees
- 681B High income child benefit charge
- 681C The amount of the charge
- 681D Extension of charge in cases where child not living with claimant
- 681E Special cases
- 681F Alteration of income limit etc by Treasury order
- 681G Meaning of “partner”
- 681H Other interpretation provisions
- 681I Winter fuel payment charge
- 681J Alteration of income limit by Treasury order
- 682 Scope of this Part
- 683 PAYE income
- 684 PAYE regulations
- 685 Tax tables
- 686 Meaning of “payment”
- 687 Payments by intermediary
- 687A Payment of employment income under Part 7A
- 688 Agency workers
- 688A Managed service companies: recovery from other persons
- 688AA Workers' services provided through intermediaries: recovery of PAYE
- 688AB Workers’ providing services through intermediaries etc: cases where taxes already paid
- 688B Travel expenses of workers providing services through intermediaries: recovery of unpaid tax
- 689 Employee of non-UK employer
- 689A Oil and gas workers on the continental shelf
- 690 Internationally mobile employees
- 690A Employer notification for internationally mobile employees
- 690B Direction by HMRC in relation to internationally mobile employees
- 690C Employees who were internationally mobile etc. before 2025-26
- 690D Employer notification for qualifying new residents or treaty non-residents
- 690E Direction by HMRC in relation to qualifying new residents or treaty non-residents
- 691 Mobile UK workforce
- 692 Organised arrangements for sharing tips
- 693 Cash vouchers
- 694 Non-cash vouchers
- 695 Credit-tokens
- 695A Employment income under Part 7A
- 696 Readily convertible assets
- 697 Enhancing the value of an asset
- 698 PAYE: special charges on employment-related securities
- 699 PAYE: conversion of shares
- 700 PAYE: gains from securities options
- 700A Employment-related securities etc: internationally mobile employees
- 701 Meaning of “asset”
- 702 Meaning of “readily convertible asset”
- 703 Introduction
- 704 Sums payable by employers under agreements
- 705 Approximations allowed in calculations
- 706 Exclusion of general earnings from income etc.
- 707 Interpretation of this Chapter
- 707A Provision of additional information to His Majesty’s Revenue and Customs
- 708 PAYE repayments
- 709 Additional provision for certain assessments
- 710 Notional payments: accounting for tax
- 711 Right to make a return
- 712 Interpretation of this Part
- 713 Donations to charity: payroll deduction scheme
- 714 Meaning of “donations”
- 715 Approval of schemes: regulation by Treasury
- 716 Alteration of amounts by Treasury order
- 716A Priority rule for dividends etc. of UK resident companies etc.
- 716B Employment intermediaries to keep, preserve and provide information etc
- 717 Orders and regulations made by Treasury or Commissioners
- 718 Connected persons
- 719 Meaning of “control”
- 720 Meaning of “ an officer of Revenue and Customs ” etc.
- 721 Other definitions
- 722 Consequential amendments
- 723 Commencement and transitional provisions and savings
- 724 Repeals and revocations
- 725 Citation
- SCHEDULE 1 Abbreviations and defined expressions
- SCHEDULE 2 ... share incentive plans
- SCHEDULE 3 ... SAYE option schemes
- SCHEDULE 4 ... CSOP schemes
- SCHEDULE 5 Enterprise management incentives
- SCHEDULE 6 Consequential Amendments
- SCHEDULE 7 Transitionals and savings
- SCHEDULE 8 Repeals and revocations
Proposed changes to this act
No one has proposed a change to this act yet.
1,080 provisions
423 “Restricted securities” and “restricted interest in securities”
(1) For the purposes of this Chapter employment-related securities are restricted securities or a restricted interest in securities if— (a) there is any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies, and (b) the market value of the employment-related securities is less than it would be but for that provision. (2) This subsection applies to provision under which— (a) there will be a transfer, reversion or forfeiture of the employment-related securities, or (if the employment-related securities are an interest in securities) of the interest or the securities, if certain circumstances arise or do not arise, (b) as a result of the transfer, reversion or forfeiture the person by whom the employment-related securities are held will cease to be beneficially entitled to the employment-related securities, and (c) that person will not be entitled on the transfer, reversion or forfeiture to receive in respect of the employment-related securities an amount of at least their market value (determined as if there were no provision for transfer, reversion or forfeiture) at the time of the transfer, reversion or forfeiture. (3) This subsection applies to provision under which there is a restriction on— (a) the freedom of the person by whom the employment-related securities are held to dispose of the employment-related securities or proceeds of their sale, (b) the right of that person to retain the employment-related securities or proceeds of their sale, or (c) any other right conferred by the employment-related securities, (not being provision to which subsection (2) applies). (4) This subsection applies to provision under which the disposal or retention of the employment-related securities, or the exercise of a right conferred by the employment-related securities, may result in a disadvantage to— (a) the person by whom the employment-related securities are held, (b) the employee (if not the person by whom they are held), or (c) any person connected with the person by whom they are held or with the employee, (not being provision to which subsection (2) or (3) applies).
Propose a change424 Exceptions
(1) Employment-related securities are not restricted securities or a restricted interest in securities by reason only that any one or more of the following is the case— (a) the employment-related securities (or the securities in which they are an interest) are unpaid or partly paid shares which may be forfeited for non-payment of calls and there is no restriction on the meeting of calls by the person by whom they are held, or (b) that person may be required to offer for sale or transfer the employment-related securities on the employee ceasing, as a result of misconduct, to be employed by the employer or a person connected with the employer, or (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) Subsection (1) does not apply if the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions.
Propose a change425 No charge in respect of acquisition in certain cases
(1) Subsection (2) applies if the employment-related securities— (a) are restricted securities, or a restricted interest in securities, by virtue of subsection (2) of section 423 (provision for transfer, reversion or forfeiture) at the time of the acquisition, and (b) will cease to be restricted securities, or a restricted interest in securities, by virtue of that subsection within 5 years after the acquisition (whether or not they may remain restricted securities or a restricted interest in securities by virtue of the application of subsection (3) or (4) of that section). (2) No liability to income tax arises in respect of the acquisition, except as provided by— (a) Chapter 3 of this Part (acquisition by conversion), (b) Chapter 3C of this Part (acquisition for less than market value), or (c) Chapter 5 of this Part (acquisition pursuant to securities option). (3) But the employer and the employee may elect that subsection (2) is not to apply to the employment-related securities. (4) An election under subsection (3)— (a) is to be made by agreement by the employer and the employee, and (b) is irrevocable. (5) Such an agreement— (a) must be made in a form approved by the Commissioners for Her Majesty’s Revenue and Customs , and (b) may not be made more than 14 days after the acquisition. (6) No election may be made under subsection (3) unless, at the time of the acquisition, the earnings from the employment are (or would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.
Propose a change426 Charge on occurrence of chargeable event
(1) If a chargeable event occurs in relation to the employment-related securities, the taxable amount counts as employment income of the employee for the relevant tax year. (2) For this purpose— (a) “chargeable event” has the meaning given by section 427, (b) “the taxable amount”is the amount determined under section 428, and (c) “the relevant tax year”is the tax year in which the chargeable event occurs. (3) Relief may be available under section 428A (relief for secondary Class 1 contributions met by employee) against an amount counting as employment income under this section. (5) This section is subject to section 429 (case outside charge under this section).
Propose a change427 Chargeable events
(1) This section applies for the purposes of section 426 (charge on occurrence of chargeable event). (2) Any of the events mentioned in subsection (3) is a “chargeable event” in relation to the employment-related securities. (3) The events are— (a) the employment-related securities ceasing to be restricted securities, or a restricted interest in securities, in circumstances in which an associated person is beneficially entitled to the employment-related securities after the event, (b) the variation of any restriction relating to the employment-related securities in such circumstances (without the employment-related securities ceasing to be restricted securities or a restricted interest in securities), and (c) the disposal for consideration of the employment-related securities, or any interest in them, by an associated person otherwise than to another associated person (at a time when they are still restricted securities or a restricted interest in securities). (4) For the purposes of this Chapter there is a variation of a restriction relating to the employment-related securities if any restriction in relation to them is removed or varied.
Propose a change428 Amount of charge
(1) The taxable amount for the purposes of section 426 (charge on occurrence of chargeable event) is— UMV×(IUP-PCP-OP)-CE (2) UMV is what would be the market value of the employment-related securities immediately after the chargeable event but for any restrictions. (3) IUP is— IUMV-DAIUMV where— IUMV is what would have been the market value of the employment-related securities at the time of the acquisition but for any restrictions, and DA is the total of any deductible amounts. (4) PCP is the aggregate of the result of the application of the formula— IUP-PCP-OP on each previous event (if any) occurring since the acquisition that was a chargeable event for the purposes of section 426 in relation to the employment-related securities (and so is nil if there has not been such a previous event). (5) OP is— UMV-AMVUMV where AMV is the actual market value of the employment-related securities immediately after the chargeable event. (6) CE is any expenses incurred by the holder of the employment-related securities in connection with— (a) the employment-related securities ceasing to be restricted securities or a restricted interest in securities, (b) the variation of a restriction relating to the employment-related securities, or (c) the disposal of the employment-related securities, together (if the chargeable event is one within section 427(3)(a) or (b) (lifting of restrictions and variation of restriction)) with any consideration given for the employment-related securities ceasing to be restricted securities or a restricted interest in securities or the variation of a restriction relating to the employment-related securities. (6A) CE also includes any amount that has counted as employment income of the employee in respect of the employment under Chapter 2 of Part 7A in relation to the employment-related securities where the relevant step (within the meaning of that Part) was taken before the chargeable event occurred. (7) For the purposes of this section each of the following is a “deductible amount”— (a) the amount of any consideration given for the acquisition of the employment-related securities, (b) any amount that constituted earnings from the employee’s employment under Chapter 1 of Part 3 (earnings) in respect of the acquisition of the employment-related securities (other than an amount of exempt income), (ba) any amount treated as earnings from the employee's employment under section 226A (employee shareholder shares: amount treated as earnings) in respect of the acquisition of the employment-related securities (other than an amount of exempt income), (bb) any amount that was charged to non-UK income tax in respect of the acquisition of the employment-related securities, but only so far as that amount exceeds any amount within paragraph (b) or (ba), (c) any amount that counted as employment income in relation to the employment-related securities under Chapter 2 or 4 of this Part as originally enacted, (d) if the employment-related securities were acquired on a conversion of other employment-related securities, any amount that counted as employment income of the employee under Chapter 3 of this Part (including that Chapter as originally enacted) (convertible securities) by reason of the conversion, and (e) if the acquisition of the employment-related securities was pursuant to a securities option, any amount that counted as employment income of the employee under section 476 (or section 476 or 477 as originally enacted) (acquisition of securities pursuant to securities option) by reason of the acquisition. (7A) In subsection (7)(b) and (ba) the references to an amount of exempt income, in a case in which the amount that constituted, or was treated as, earnings in respect of the acquisition was not an amount of general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applied, includes any amount that would have been an amount of exempt income if any of those charging provisions had applied. (7B) In subsection (7)(bb) “non-UK income tax” means a tax chargeable on income under the law of a territory outside the United Kingdom that corresponds to United Kingdom income tax. (7C) A tax is not outside the scope of subsection (7B) by reason only that it— (a) is chargeable under the law of a province, state or other part of a country, or (b) is levied by or on behalf of a municipality or other local body. (8) If the employment-related securities are convertible securities, or an interest in convertible securities, their market value is to be determined for the purposes of this section as if they were not. (9) Where the chargeable event is one within section 427(3)(c) (disposal) and CD is less than AMV, the taxable amount for the purposes of section 426 is the amount determined under subsection (1) multiplied by— CDAMV where— CD is the consideration given for the employment-related securities, and AMV is the actual market value of the employment-related securities immediately after the chargeable event. (10) But subsection (9) does not apply if something which affects the employment-related securities has been done (at or before the time of the chargeable event) as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.
Propose a change428A Relief for secondary Class 1 contributions met by employee
(1) Relief is available under this section against an amount counting as employment income under section 426 (“the employment income amount”) if— (a) an agreement having effect under paragraph 3A of Schedule 1 to the Contributions and Benefits Act has been entered into allowing the secondary contributor to recover from the employee the whole or part of any secondary Class 1 contribution in respect of that amount, or (b) an election having effect under paragraph 3B of that Schedule is in force which has the effect of transferring to the employee the whole or part of the liability to pay secondary Class 1 contributions in respect of that amount. (2) The amount of the relief is the total of— (a) any amount that under the agreement referred to in subsection (1)(a) is recovered in respect of the employment income amount by the secondary contributor before 5th June in the tax year following that in which the chargeable event occurs, and (b) the amount of any liability in respect of the employment income amount that, by virtue of the election referred to in subsection (1)(b), has become the employee’s liability. (3) If notice of withdrawal of approval of the election is given, the amount of the liability referred to in subsection (2)(b) is limited to the amount met before 5th June in the tax year following that in which the chargeable event occurs. (4) Relief under this section is given by way of deduction from the amount otherwise counting as employment income. (5) Relief under this section does not affect the amount to be taken into account— (a) as employment income in determining contributions payable under the Contributions and Benefits Act, or (b) as relevant employment income for the purposes of paragraph 3A or 3B of Schedule 1 to that Act. (6) In this section— “approval”, in relation to an election, means approval by an officer of Revenue and Customs under paragraph 3B of Schedule 1 to the Contributions and Benefits Act, and “secondary contributor” has the same meaning as in that Act (see section 7).
Propose a change429 Case outside charge under section 426
(1) Section 426 (charge on occurrence of chargeable event) does not apply if— (a) the employment-related securities are shares (or an interest in shares) in a company of a class, (b) the provision by virtue of which the employment-related securities are restricted securities, or a restricted interest in securities, applies to all the company’s shares of the class, (ba) subsection (1A) is satisfied, (c) all the company’s shares of the class (other than the employment-related securities) are affected by an event similar to that which is a chargeable event in relation to the employment-related securities, and (d) subsection (3) or (4) is satisfied. (1A) This subsection is satisfied unless something which affects the employment-related securities has been done (at or before the time when section 426 would apply) as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions. (2) For the purposes of subsection (1)(c) shares are affected by an event similar to that which is a chargeable event in relation to the employment-related securities— (a) in the case of a chargeable event within section 427(3)(a) (lifting of restrictions), if the provision mentioned in subsection (1)(b) ceases to apply to them, (b) in the case of a chargeable event within section 427(3)(b) (variation of restriction), if that provision is varied in relation to them in the same way as in relation to the employment-related securities, or (c) in the case of a chargeable event within section 427(3)(c) (disposal), if they are disposed of. (3) This subsection is satisfied if, immediately before the event that would be a chargeable event, the company is employee-controlled by virtue of holdings of shares of the class. (4) This subsection is satisfied if, immediately before that event, the majority of the company’s shares of the class are not employment-related securities. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Propose a change430 Election for outstanding restrictions to be ignored
(1) The employer and the employee may elect that— (a) on a chargeable event the taxable amount for the purposes of section 426 is to be determined by applying section 428(1) as if it did not include a reference to OP, and (b) sections 426 to 429 are not to apply to the employment-related securities after that chargeable event. (2) An election under this section— (a) is to be made by agreement by the employer and the employee, and (b) is irrevocable. (3) Such an agreement— (a) must be made in a form approved by the Commissioners for Her Majesty’s Revenue and Customs , and (b) may not be made more than 14 days after the chargeable event. (4) No election may be made under this section unless, at the time of the chargeable event, the earnings from the employment are (or would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.
Propose a change430A Application of this Chapter where securities exchanged for further securities
(1) This section applies if— (a) an associated person disposes of the employment-related securities (“the old securities”) for consideration, otherwise than to another associated person, (b) the whole or part of the consideration consists of, or includes, other securities which are restricted securities (“the new securities”) being acquired by an associated person, (c) the value of the consideration determined in accordance with subsection (2) is no more than what would have been the market value of the old securities immediately before the disposal but for any restrictions, and (d) the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of the disposal. (2) The value of the consideration is the sum of— (a) what would have been the market value of the new securities immediately before the disposal but for any restrictions, and (b) the value of the rest of the consideration (if any). (3) If the consideration consists partly of the new securities and partly of other consideration, the disposal is to be treated for the purposes of this Chapter as being two separate disposals as follows— (a) a disposal, that is a chargeable event within section 427(3)(c), of the appropriate amount of the old securities (see subsection (4)) for such of the consideration as does not consist of the new securities, and (b) a disposal, to which this section applies, of the remaining old securities for consideration consisting wholly of the new securities. (4) In subsection (3)(a) the appropriate amount of the old securities is— OS × OC TC where— OS is the total number of the old securities, OC is the value of such of the consideration as does not consist of the new securities, and TC is value of the consideration determined in accordance with subsection (2). (5) If the consideration consists wholly of the new securities— (a) neither the disposal of the old securities, nor the acquisition of the new securities, gives rise to any liability to income tax, (b) the disposal is not a chargeable event within section 427(3)(c), and (c) this Chapter applies to the new securities as it applies to the old securities, subject to subsections (6) to (17). (6) Sections 425 and 431 do not apply in relation to the new securities. (7) If, at the time of the disposal, sections 426 to 429 do not apply to the old securities by virtue of— (a) an election made under section 430(1) or 431(1) in relation to the old securities, or (b) this subsection, sections 426 to 430 do not apply to the new securities. (8) If there is a chargeable event for the purposes of section 426 in relation to any of the new securities, for the purposes of section 428 (amount of charge)— (a) IUP (see subsection (3) of that section) is to be determined in accordance with subsection (9), and (b) PCP (see subsection (4) of that section) is to be determined in accordance with subsection (10). (9) IUP is equal to what IUP was, for the purposes of determining the taxable amount for the purposes of section 426, in relation to chargeable events relating to the old securities that occurred before the disposal (or what it would have been had there been any such chargeable events). (10) PCP is the aggregate of— (a) PCP determined in accordance with section 428(4), and (b) what PCP would have been, for the purposes of determining the taxable amount for the purposes of section 426, if a chargeable event relating to the old securities had occurred immediately before the disposal but after any chargeable events relating to the old securities that actually did occur before the disposal. (11) Subsections (12) to (14) apply if— (a) section 425(2) (no liability to income tax on acquisition of certain securities subject to forfeiture etc) applied in relation to the old securities, and (b) at the time of the disposal, there is still a restriction relating to those securities such that they are restricted securities by virtue of section 423(2) (provision for forfeiture etc). (12) This Chapter has effect in relation to any of the new securities that are not restricted securities by virtue of section 423(2) as if— (a) there were a restriction relating to them (“the deemed restriction”) corresponding to the restriction relating to the old securities mentioned in subsection (11)(b), and (b) immediately after their acquisition, the deemed restriction were removed. (13) Subsection (14) applies if— (a) there is a restriction by virtue of which some or all of the new securities are, at the time of the disposal, restricted securities, by virtue of subsection (2) of section 423, and (b) within 5 years after the acquisition of the old securities, the restriction is not removed or varied such that the new securities to which it relates cease to be restricted securities by virtue of that subsection. (14) For the purposes of this Chapter the restriction mentioned in subsection (13) is to be treated as being removed 5 years after the acquisition of the old securities. (15) Subsection (16) applies if, at the time of the disposal— (a) there is a restriction relating to the old securities such that they are restricted securities by virtue of section 423(2), and (b) subsections (13) and (14) apply in relation to the old securities (including by virtue of subsection (16)). (16) Subsections (12) to (14) apply in relation to the new securities, but— (a) the reference in subsection (12)(a) to the restriction mentioned in subsection (11)(b) is to be read as a reference to the restriction mentioned in subsection (15)(a), and (b) the references in subsections (13)(b) and (14) to the acquisition of the old securities are to be read as references to the acquisition of the original forfeitable securities. (17) In subsection (16) “original forfeitable securities” means the restricted securities by virtue of the application to which of section 425(2) subsections (13) and (14) apply to the old securities. (18) In this section references to restricted securities include a restricted interest in securities.
Propose a change431 Election for full or partial disapplication of this Chapter
(1) The employer and the employee may elect in relation to employment-related securities which are restricted securities or a restricted interest in securities that— (a) for the relevant tax purposes their market value at the time of the acquisition is to be calculated as if they were not, and (b) sections 425 to 430 are not to apply to the employment-related securities. (2) Or the employer and the employee may elect in relation to employment-related securities which are restricted securities or a restricted interest in securities that— (a) for the relevant tax purposes their market value at the time of the acquisition is to be calculated, and (b) sections 425 to 430 are to apply to the employment-related securities, as if any specified restriction did not apply to the employment-related securities. (3) For the purposes of subsections (1) and (2) “the relevant tax purposes” are— (a) determining any amount that is to constitute earnings from the employment under Chapter 1 of Part 3 (earnings), (aa) determining any amount that is to be treated as earnings from the employment where section 226A applies (employee shareholder shares: amount treated as earnings), (b) determining the amount of any gain realised on the occurrence of an event that is a chargeable event by virtue of section 439(3)(a) (conversion), (c) operating Chapter 3C of this Part (acquisition of securities for less than market value), ... (d) determining any amount that counts as employment income of the employee under Chapter 5 of this Part (securities acquired pursuant to securities option) , and (e) determining any amount that counts as employment income of the employee in respect of the employment under Chapter 2 of Part 7A (employment income provided through third parties) (4) An election under this section— (a) is to be made by agreement by the employer and the employee, and (b) is irrevocable. (5) Such an agreement— (a) must be made in a form approved by the Commissioners for Her Majesty’s Revenue and Customs and (b) may not be made more than 14 days after the acquisition. (6) No election may be made under this section unless, at the time of the acquisition, the earnings from the employment are (or would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.
Propose a change431A Shares under tax advantaged plan or scheme
(1) Where employment-related securities are restricted securities or a restricted interest in securities, the employer and the employee are to be treated as making an election under section 431(1) in relation to the employment-related securities if they are shares, or an interest in shares, to which this subsection applies. (2) Subsection (1) applies to— (a) shares awarded or acquired under a Schedule 2 share incentive plan (within the meaning of Chapter 6 of this Part) in circumstances in which (in accordance with section 490) no liability to income tax arises, (b) shares acquired by the exercise of a share option granted under a Schedule 3 SAYE option scheme (within the meaning of Chapter 7 of this Part) in circumstances in which (in accordance with section 519) no liability to income tax arises, (c) shares acquired by the exercise of a share option granted under a Schedule 4 CSOP scheme (within the meaning of Chapter 8 of this Part) in circumstances in which (in accordance with section 524) no liability to income tax arises, and (d) shares acquired by the exercise of a qualifying option within the meaning of section 527(4) (enterprise management incentives) in circumstances in which (in accordance with section 530) no liability to income tax arises.
Propose a change431B Securities acquired for purpose of avoidance
Where employment-related securities are restricted securities or a restricted interest in securities, the employer and the employee are to be treated as making an election under section 431(1) in relation to the employment-related securities if (a) the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions , and (b) at the time of the acquisition, the earnings from the employment are (or would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.
Propose a change432 Definitions
(1) In this Chapter— “interest”, in relation to securities, “securities”, “securities option”, and “shares”, have the meaning indicated in section 420. (2) In this Chapter “market value” has the meaning indicated in section 421(1). (3) For the purposes of this Chapter sections 421(2) and 421A apply for determining the amount of the consideration given for anything and section 421I applies for determining the amount of the consideration given for the acquisition of employment-related securities. (4) In this Chapter— “the acquisition”, “the employee” (except in section 429), “the employer”, “the employment”, and “employment-related securities”, have the meaning indicated in section 421B(8). (5) In this Chapter “associated person” has the meaning indicated in section 421C. (6) In this Chapter— “associated company”, and “employee-controlled”, have the meaning indicated in section 421H. (7) In this Chapter— “restricted interest in securities”, and “restricted securities”, have the meaning indicated in sections 423 and 424. (8) In this Chapter “restriction”, in relation to securities or an interest in securities, means provision relating to the securities or interest which is made by any contract, agreement, arrangement or condition and to which any of subsections (2) to (4) of section 423 applies. (9) In this Chapter “variation”, in relation to a restriction, has the meaning indicated in section 427(4). (10) In this Chapter “convertible securities” has the same meaning as in Chapter 3 of this Part (see section 436).
Propose a change435 Application of this Chapter
This Chapter applies to employment-related securities if they are— (a) convertible securities, or (b) an interest in convertible securities, at the time of the acquisition.
Propose a change436 “Convertible securities”
For the purposes of this Chapter securities are convertible securities if— (a) they confer on the holder an entitlement (whether immediate or deferred and whether conditional or unconditional) to convert them into securities of a different description, (b) a contract, agreement, arrangement or condition authorises or requires the grant of such an entitlement to the holder if certain circumstances arise, or do not arise, or (c) a contract, agreement, arrangement or condition makes provision for the conversion of the securities (otherwise than by the holder) into securities of a different description.
Propose a change437 Adjustment of charge
(1) For the purposes of— (a) any liability to tax under Chapter 1 of Part 3 (earnings), Chapter 10 of Part 3 (taxable benefits: residual liability to charge) , section 226A (employee shareholder shares: amount treated as earnings) or Chapter 5 of this Part (acquisition of securities pursuant to securities option) or Chapter 2 of Part 7A (employment income provided through third parties), and (b) the operation of Chapter 3C of this Part (acquisition of securities for less than market value), the market value of the employment-related securities is to be determined as if they were not convertible securities or an interest in convertible securities (2) Subsection (1) does not apply if the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions unless the market value of the employment-related securities determined under subsection (1) would be greater than that determined under subsection (3). (3) Where subsection (1) does not apply by virtue of subsection (2) the market value of the employment-related securities is to be determined— (a) where the securities which are (or an interest in which is) the employment-related securities fall within paragraph (a) of section 436 and the entitlement to convert is not both immediate and unconditional, as if it were, (b) where they fall within paragraph (b) of that section, as if the circumstances are such that an entitlement to convert arises immediately, and (c) where they fall within paragraph (c) of that section, as if provision were made for their immediate conversion; and in each case is to be determined as if they were immediately and fully convertible. (4) In subsection (3) “immediately and fully convertible” means convertible immediately after the acquisition of the employment-related securities so as to obtain the maximum gain that would be possible on a conversion at that time (assuming, where the securities into which the securities may be converted were not in existence at that time and it is appropriate to do so, that they were) without giving any consideration for the conversion or incurring any expenses in connection with it.
Propose a change438 Charge on occurrence of chargeable event
(1) If a chargeable event occurs in relation to the employment-related securities, the taxable amount counts as employment income of the employee for the relevant tax year. (2) For this purpose— (a) “chargeable event” has the meaning given by section 439, (b) “the taxable amount”is the amount determined under section 440, and (c) “the relevant tax year”is the tax year in which the chargeable event occurs. (3) Relief may be available under section 442A (relief for secondary Class 1 contributions met by employee) against an amount counting as employment income under this section. (5) This section is subject to section 443 (case outside charge under this section).
Propose a change439 Chargeable events
(1) This section applies for the purposes of section 438 (charge on occurrence of chargeable event). (2) Any of the events mentioned in subsection (3) is a “chargeable event” in relation to the employment-related securities. (3) The events are— (a) the conversion of the employment-related securities (or the securities in which they are an interest) into securities of a different description in circumstances in which an associated person is beneficially entitled to the securities into which the employment-related securities are converted, (b) the disposal for consideration of the employment-related securities, or any interest in them, by an associated person otherwise than to another associated person (at a time when they are still convertible securities or an interest in convertible securities), (c) the release for consideration of the entitlement to convert the employment-related securities (or the securities in which they are an interest) into securities of a different description, and (d) the receipt by an associated person of a benefit in money or money’s worth in connection with the entitlement to convert (other than securities acquired on the conversion of the employment-related securities or consideration such as is mentioned in paragraph (b) or (c)). (4) A benefit received on account of any disability (within the meaning of the Equality Act 2010 in England and Wales and Scotland, or the Disability Discrimination Act 1995) of the employee is to be disregarded for the purposes of subsection (3)(d).
Propose a change440 Amount of charge
(1) The taxable amount for the purposes of section 438 (charge on occurrence of chargeable event) is— AG-CE (2) AG is the amount of any gain realised on the occurrence of the chargeable event. (3) CE is the amount of any consideration given for the entitlement to convert the employment-related securities or the securities in which they are an interest together with the amount of any expenses incurred by the holder of the employment-related securities in connection with the conversion, disposal, release or receipt. (3A) If (because of subsection (2) of section 437) subsection (1) of that section did not apply in relation to the employment-related securities, the taxable amount is to be reduced by the amount by which— (a) the market value of the employment-related securities for the purposes specified in that subsection, exceeded (b) what it would have been had that subsection applied, (less the aggregate of any amount by which the taxable amount on any previous chargeable event relating to the employment-related securities has been reduced under this subsection). (4) Section 441 explains what is the amount of any gain realised on the occurrence of a chargeable event. (5) Section 442 explains whether consideration is given for the entitlement to convert the employment-related securities or the securities in which they are an interest and, if it is, what is its amount.
Propose a change441 Amount of gain realised on occurrence of chargeable event
(1) This section applies for the purposes of section 440 (amount of charge on occurrence of chargeable event). (2) The amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 439(3)(a) (conversion) is— CMVCS-(CMVERS+CC) (3) The amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 439(3)(b) (disposal) is— DC-CMVERS (4) The amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 439(3)(c) (release of entitlement to convert) is the amount of the consideration received by an associated person in respect of the release. (5) The amount of the gain realised on the occurrence of an event that is a chargeable event by virtue of section 439(3)(d) (receipt of benefit) is the amount or market value of the benefit. (6) CMVCS— (a) if the employment-related securities are securities, is the market value at the time of the chargeable event of the securities into which they are converted (determined, where those securities are themselves convertible securities, as if they were not), or (b) if the employment-related securities are an interest in securities, is the same proportion of that market value as the market value of the interest in the securities in which the employment-related securities are an interest bears to the market value of those securities. (7) CMVERS is the market value of the employment-related securities at the time of the chargeable event determined as if they were not convertible securities or an interest in convertible securities. (8) CC is the amount of any consideration given for the conversion of the employment-related securities. (9) DC is the amount of the consideration given on the disposal. (10) Subsection (11) applies for the purposes of subsection (2) or (3) if— (a) 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, and (b) the amount mentioned in subsection (11)(a) is higher than the amount mentioned in subsection (11)(b). (11) The amount of the gain realised is reduced (but not below nil) by the amount equal to— (a) the amount that counted as employment income of the employee in respect of the employment under Chapter 2 of Part 7A, less (b) the market value of the employment-related securities when the relevant step was taken determined as if they were not convertible securities or an interest in convertible securities.
Propose a change442 Amount of consideration given for entitlement to convert
(1) This section applies for the purposes of section 440 (amount of charge on occurrence of chargeable event). (2) Consideration is to be regarded as given for the entitlement to convert the employment-related securities (or the securities in which they are an interest) if (and only if) ACS exceeds NCMV. (3) The amount of the consideration to be regarded as so given is the amount of the excess. (4) ACS is the amount of the consideration given for the acquisition of the employment-related securities. (5) NCMV is the market value of the employment-related securities at the time of the acquisition, determined as if they were not convertible securities or an interest in convertible securities.
Propose a change442A Relief for secondary Class 1 contributions met by employee
(1) Relief is available under this section against an amount counting as employment income under section 438 (“the employment income amount”) if— (a) an agreement having effect under paragraph 3A of Schedule 1 to the Contributions and Benefits Act has been entered into allowing the secondary contributor to recover from the employee the whole or part of any secondary Class 1 contribution in respect of that amount, or (b) an election having effect under paragraph 3B of that Schedule is in force which has the effect of transferring to the employee the whole or part of the liability to pay secondary Class 1 contributions in respect of that amount. (2) The amount of the relief is the total of— (a) any amount that under the agreement referred to in subsection (1)(a) is recovered in respect of the employment income amount by the secondary contributor before 5th June in the tax year following that in which the chargeable event occurs, and (b) the amount of any liability in respect of the employment income amount that, by virtue of the election referred to in subsection (1)(b), has become the employee’s liability. (3) If notice of withdrawal of approval of the election is given, the amount of the liability referred to in subsection (2)(b) is limited to the amount met before 5th June in the tax year following that in which the gain is realised. (4) Relief under this section is given by way of deduction from the amount otherwise counting as employment income. (5) Relief under this section does not affect the amount to be taken into account— (a) as employment income in determining contributions payable under the Contributions and Benefits Act, or (b) as relevant employment income for the purposes of paragraph 3A or 3B of Schedule 1 to that Act. (6) In this section— “approval”, in relation to an election, means approval by an officer of Revenue and Customs under paragraph 3B of Schedule 1 to the Contributions and Benefits Act, and “secondary contributor” has the same meaning as in that Act (see section 7).
Propose a change443 Case outside charge under section 438
(1) Section 438 (charge on occurrence of chargeable event) does not apply if— (a) the employment-related securities are shares (or an interest in shares) in a company of a class, (b) all the company’s shares of the class are convertible securities, (ba) subsection (1A) is satisfied, (c) all the company’s shares of the class (other than the employment-related securities) are affected by an event similar to that which is a chargeable event in relation to the employment-related securities, and (d) subsection (3) or (4) is satisfied. (1A) This subsection is satisfied unless something which affects the employment-related securities has been done (at or before the time when section 438 would apply) as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions. (2) For the purposes of subsection (1)(c) shares are affected by an event similar to that which is a chargeable event in relation to the employment-related securities— (a) in the case of a chargeable event within section 439(3)(a) (conversion), if they are converted into securities of a different description, (b) in the case of a chargeable event within section 439(3)(b) (disposal), if they are disposed of, (c) in the case of a chargeable event within section 439(3)(c) (release of entitlement to convert), if the entitlement to convert them into securities of a different description is released, or (d) in the case of a chargeable event within section 439(3)(d) (receipt of benefit), if a similar benefit is received in respect of the entitlement to convert them. (3) This subsection is satisfied if, immediately before the event that would be a chargeable event, the company is employee-controlled by virtue of holdings of shares of the class. (4) This subsection is satisfied if, immediately before that event, the majority of the company’s shares of the class are not employment-related securities. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Propose a change444 Definitions
(1) In this Chapter— “interest”, in relation to securities, “securities”, and “shares”, have the meaning indicated in section 420. (2) In this Chapter “market value” has the meaning indicated in section 421(1). (3) For the purposes of this Chapter sections 421(2) and 421A apply for determining the amount of the consideration given for anything and section 421I applies for determining the amount of the consideration given for the acquisition of employment-related securities. (4) In this Chapter— “the acquisition”, “the employee” (except in section 443), and “employment-related securities”, have the meaning indicated in section 421B(8). (5) In this Chapter “associated person” has the meaning indicated in section 421C. (6) In this Chapter— “associated company”, and “employee-controlled”, have the meaning indicated in section 421H. (7) In this Chapter “convertible securities” has the meaning indicated in section 436.
Propose a change446A Application of this Chapter
(1) This Chapter applies in certain cases where the market value of employment-related securities (or other relevant securities or interests in securities) is reduced by things done otherwise than for genuine commercial purposes. (2) The following are among the things that are, for the purposes of this Chapter, done otherwise than for genuine commercial purposes— (a) anything done as part of a scheme or arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax or national insurance contributions, and (b) any transaction between companies which are members of the same group on terms which are not such as might be expected to be agreed between persons acting at arm’s length (other than a payment for group relief). (3) In subsection (2)(b)— (a) “group” means a company and its 51% subsidiaries, and (b) “group relief” has the same meaning as in section 183(1) of CTA 2010.
Propose a change446B Charge on acquisition
(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), (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), ... (e) Chapter 5 of this Part (acquisition pursuant to securities option) , or (f) Chapter 2 of Part 7A (employment income provided through third parties)
Propose a change446C Amount of charge
(1) The taxable amount for the purposes of section 446B (charge on acquisition) is— FMV-MV (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. (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).
Propose a change446D Restricted securities and convertible securities
(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.
Propose a change446E Charge on restricted securities
(1) This section applies where the market value of employment-related securities which are restricted securities or a restricted interest in securities is artificially low— (a) immediately after an event which is a chargeable event in relation to the employment-related securities for the purposes of section 426 (charge on restricted securities), (aa) immediately before the employment-related securities are disposed of (in circumstances which do not constitute such an event) or are cancelled without being disposed of, or (b) on 5th April in any year. (2) The market value of the employment-related securities is artificially low where it has been reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes within the relevant period. (3) “The relevant period”is the period beginning— (a) if section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applied in relation to the employment-related securities, 7 years before the acquisition, and (b) in any other case, 7 years before the relevant date, and ending with the relevant date. (4) “The relevant date”is— (a) in a case within subsection (1)(a), the date on which the chargeable event concerned occurs, (b) in a case within subsection (1)(aa), the date on which the disposal or cancellation concerned occurs, and (c) in a case within subsection (1)(b), the 5th April concerned. (5) Where this section applies in a case within subsection (1)(aa) or (b), a chargeable event within section 427(3)(a) (lifting of restrictions) is to be treated as occurring in relation to the employment-related securities on the relevant date. (6) In every case where this section applies, subsection (1) of section 428 (amount of charge on restricted securities) applies as if the reference in subsection (2) of that section to what would be the market value of the employment-related securities immediately after the chargeable event but for any restrictions were to what would be their market value at the appropriate time but for the matters to be disregarded. (7) “The appropriate time”is— (a) in a case within subsection (1)(a) or (b), the time immediately after the chargeable event concerned, and (b) in a case within subsection (1)(aa), the time immediately before the chargeable event concerned. (8) “The matters to be disregarded” are— (a) any restrictions, (b) the things done as mentioned in subsection (2), and (c) if the employment-related securities are about to be disposed of or cancelled, that fact. (9) Where this section applies in a case within subsection (1)(aa), section 428(1) applies with the omission of the reference to OP. (10) Where this section applies in a case within subsection (1)(a) and the chargeable event concerned is within section 427(3)(c) (disposal for consideration), section 428 applies with the omission of subsection (9) (case where consideration is less than actual market value).
Propose a change446F Adjustment of market value: conditional interests
(1) This section applies where the market value of an employee’s interest in shares which is only conditional is artificially low immediately after a chargeable event relating to the shares under section 427 as originally enacted. (2) The market value of the shares is artificially low where it has been reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes within the period beginning— (a) 7 years before the chargeable event, or (b) with 16th April 2003, whichever is later. (3) There is a chargeable event in relation to shares if section 427 (as originally enacted) applies in relation to them. (4) The reference in the definition of MV in section 428(1) (as originally enacted) to the market value of the employee’s interest is to what would be the market value but for the reduction as a result of the things done as mentioned in subsection (2). (5) Expressions used in this section and in Chapter 2 of this Part as originally enacted have the same meaning in this section as in that Chapter.
Propose a change446G Adjustment of market value: consideration for entitlement to convert
(1) This section applies where the market value of employment-related securities which are convertible securities or an interest in convertible securities (determined as if they were not) 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 reference to the market value of the employment-related securities in the definition of NCMV in section 442(5) (value of convertible securities at time of acquisition) is to what would be the market value but for the reduction as a result of the things done as mentioned in subsection (1) (and but for the fact that they are convertible securities or an interest in convertible securities).
Propose a change446H Adjustment of market value: charge on conversion
(1) This section applies where the market value of securities (“the converted securities”) into which employment-related securities (or securities in which employment-related securities are an interest) are converted is artificially low at the time of an event which is a chargeable event in relation to the employment-related securities by virtue of section 439(3)(a) (conversion). (2) The market value of the converted securities is artificially low where it 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 chargeable event. (3) The references to the market value of the converted securities in the definition of CMVCS in section 441(6) (amount of gain realised by conversion) are to what would be the market value but for the reduction as a result of the things done as mentioned in subsection (2).
Propose a change446I Adjustment of consideration or benefit received
(1) This section applies where any consideration or benefit mentioned in— (a) section 428(9) (consideration on disposal of restricted securities), (b) section 441(4), (5) or (9) (consideration for disposal of convertible securities or release of entitlement to convert or benefit received in respect of entitlement to convert), (c) section 446C(4) (securities with artificially depressed market value: MV to be amount of consideration), (d) sections 446X and 446Y(3) (consideration for disposal of securities exceeding market value), or (e) section 448 (securities benefit not otherwise subject to tax), consists (in whole or in part) in the provision of securities or an interest in securities the market value of which is artificially low. (2) The market value of any securities or interest in securities is artificially low where it 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 receipt of the consideration or benefit. (3) The market value of the consideration or benefit consisting in the provision of the securities or interest in securities is for the purposes of the provision or provisions concerned to be taken to be what it would be but for the reduction as a result of the things done as mentioned in subsection (2).
Propose a change446IA Disapplication of exceptions from charges
(1) Section 429 (exception from charge under section 426 for certain company shares) does not prevent section 426 (restricted securities: chargeable events) applying in relation to an event if section 446E or 446I(1)(a) would have effect in relation to the event. (2) Section 443 (exception from charge under section 438 for certain company shares) does not prevent section 438 (convertible securities: chargeable events) applying in relation to an event if section 446G, 446H or 446I(1)(b) would have effect in relation to the event. (3) Section 446R (exception from charge under Chapter 3C for certain company shares) does not prevent that Chapter (securities acquired for less than market value) applying in relation to employment-related securities if section 446B would have effect in relation to them. (4) Section 449 (exception from charge under Chapter 4 for certain company shares) does not prevent that Chapter (benefits from securities) applying in relation to a benefit if section 446I(1)(e) would have effect in relation to the benefit.
Propose a change446J Definitions
(1) In this Chapter— “interest”, in relation to securities, and “securities”, have the meaning indicated in section 420. (2) In this Chapter “market value” has the meaning indicated in section 421(1). (3) For the purposes of this Chapter sections 421(2) and 421A apply for determining the amount of the consideration given for anything and section 421I applies for determining the amount of the consideration given for the acquisition of employment-related securities. (4) In this Chapter— “the acquisition”, “the employee”, and “employment-related securities”, have the meaning indicated in section 421B(8). (5) In this Chapter— “restricted interest in securities”, and “restricted securities”, have the same meaning as in Chapter 2 of this Part (see sections 423 and 424). (6) In this Chapter “restriction” has the same meaning as in Chapter 2 of this Part (see section 432(8)). (7) In this Chapter “convertible securities” has the same meaning as in Chapter 3 of this Part (see section 436).
Propose a change446K Application of this Chapter
(1) This Chapter applies in certain cases where the market value of employment-related securities is increased by things done otherwise than for genuine commercial purposes. (2) The following are among the things that are, for the purposes of this Chapter, done otherwise than for genuine commercial purposes— (a) anything done as part of a scheme or arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax or national insurance contributions, and (b) any transaction between companies which are members of the same group on terms which are not such as might be expected to be agreed between persons acting at arm’s length (other than a payment for group relief). (3) In subsection (2)(b)— (a) “group” means a company and its 51% subsidiaries, and (b) “group relief” has the same meaning as in section 183(1) of CTA 2010. (4) In this Chapter, in relation to the market value of the employment-related securities— “non-commercial increase” means an increase in the market value as a result of anything done otherwise than for genuine commercial purposes, and “non-commercial reduction” means a reduction in the market value as a result of anything done otherwise than for genuine commercial purposes.
Propose a change446L Charge on non-commercial increases
(1) This section applies in relation to employment-related securities where on a date that is the valuation date in relation to a relevant period IMV is at least 10% greater than MV. (2) The taxable amount determined under subsection (4) counts as employment income of the employee for the relevant tax year (but subject to sections 446M and 446N). (3) The “relevant tax year” is the tax year in which the valuation date falls. (4) The taxable amount is— IMV-MV (5) IMV is the market value of the employment-related securities on the valuation date. (6) MV is the amount that would be the market value of the employment-related securities on the valuation date if any non-commercial increases during the relevant period were disregarded. (7) For the purposes of subsections (5) and (6)— (a) any restrictions having effect in relation to the employment-related securities on the valuation date, and (b) any non-commercial reductions during the relevant period, are to be disregarded.
Propose a change446M Securities subject to restriction on valuation date
(1) This section applies where on the valuation date the employment-related securities are relevant restricted securities. (2) The amount determined under section 446L(4) is to be multiplied by CP. (3) CP is— 1-OP where OP is the amount that would be determined under section 428(5) (amount of charge on chargeable event in relation to restricted securities) on the valuation date if there were on that date a chargeable event (resulting in no tax charge). (4) For the purposes of this section the employment-related securities are relevant restricted securities if they are restricted securities or a restricted interest in securities but are not subject to— (a) an election under section 430 (election to ignore outstanding restrictions) in relation to a chargeable event which occurred before the valuation date, or (b) an election under section 431(1) (election to treat securities as not subject to restrictions). (5) If sections 425 to 430 apply to the employment-related securities in accordance with section 431(2) (election to treat securities as not subject to specified restrictions), the reference in subsection (3) to the amount that would be determined under section 428(5) is to the amount that would be so determined in accordance with section 431(2).
Propose a change