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HMRC internal manual

Employment Income Manual

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PAYE: readily convertible assets: examples: introduction

Section 702 ITEPA 2003

The meaning of readily convertible assets is wide ranging (see EIM11900). Determining whether a payment of, or on account of, PAYE income of an employee is provided in the form of a readily convertible asset requires a careful review of all the relevant facts. EIM11921 to EIM11927 provide some examples.

Shares as readily convertible assets before 10 July 2003

Where shares are capable of being sold on a recognised investment exchange or the New York Stock exchange, Section 702(1)(a)(i) or (iii) makes it clear that the shares are readily convertible assets. However, for other shares the position may not be so clear cut.

Where shares are capable of being sold on a stock exchange or in a similar market, then the shares will be readily convertible assets by virtue of Section 702(1)(c) because trading arrangements exist. Otherwise a careful review of all the relevant facts must be undertaken to determine whether either trading arrangements exist at the time the shares are awarded or trading arrangements are likely to come into existence in accordance with any arrangements or understanding existing at that time.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Shares as readily convertible assets from 10 July 2003

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.