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HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
Updated
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PAYE: employment-related securities: securities with artificially depressed market value

Part 7 Chapter 3A ITEPA 2003

Part 7 Chapter 3A ITEPA 2003 was introduced with effect from 16 April 2003 by Schedule 22 FA 2003. It provides for a charge to income tax in certain cases where the market value of employment-related securities is reduced by things done otherwise than for genuine commercial purposes. The Share Schemes Manual will be amended to provide detailed guidance in due course.

PAYE

Section 698 ITEPA 2003 was fundamentally amended by Schedule 22 FA 2003 with effect from 1 September 2003. Where:

  • an employee acquires employment-related securities on or after 1 September 2003 and
  • an amount counts as employment income of an employee by reason of Part 7 Chapter 3A

then by virtue of Section 698 the employer is required to operate PAYE if the relevant employment-related securities are readily convertible assets (see EIM12400).

The employer is not required to operate PAYE on an amount that counts as employment income of an employee by reason of Part 7 Chapter 3A if the relevant employment-related securities are acquired before 1 September 2003.