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HMRC internal manual

Employment Income Manual

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PAYE: meaning of readily convertible assets

Section 702 ITEPA 2003

Readily convertible asset is a term specifically defined for the purposes of Part 11 Chapter 4 ITEPA 2003. Its meaning is explained in Section 702.

There are 9 possibilities to consider when determining whether an asset is a readily convertible asset. Only one needs to be satisfied. The possibilities are:

  • an asset capable of being sold or otherwise realised on a recognised investment exchange (see EIM11901)
  • an asset capable of being sold or otherwise realised on the London Bullion Market (see EIM11902)
  • an asset capable of being sold or otherwise realised on the New York Stock Exchange (see EIM11903)
  • an asset capable of being sold or otherwise realised on a market for the time being specified in PAYE regulations (see EIM11904)
  • an asset consisting in the rights of an assignee, or any other rights, in respect of a money debt that is or may become due to the employer or any other person (see EIM11905)
  • an asset consisting in property that is subject to a warehousing regime, or any right in respect of property so subject (see EIM11906)
  • an asset consisting in anything that is likely (without anything being done by the employee) to give rise to, or to become, a right enabling a person to obtain an amount or total amount of money that is likely to be similar to the expense incurred in the provision of the asset (see EIM11907)
  • an asset for which trading arrangements are in existence, or are likely to come into existence in accordance with any arrangements of another description existing when the asset is provided (see EIM11908)
  • an asset for which trading arrangements are in existence, or are likely to come into existence in accordance with any understanding existing when the asset is provided (see EIM11908).

Section 702 ITEPA 2003 was amended by Schedule 22 FA 2003 with effect from 10 July 2003. When considering an event occurring on or after 10 July 2003 that gives rise to a charge to tax on employment income see EIM12400.

Exclusion from the definition of readily convertible assets

Some shares are excluded from being assets for the purposes of Chapter 11 ITEPA 2003 and so cannot be readily convertible assets (see EIM11931).