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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 enhanced market value

Part 7 Chapter 3B ITEPA 2003

Part 7 Chapter 3B 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 increased by things done otherwise than for genuine commercial purposes. The Share Schemes Manual will be amended to provide detailed guidancein due course.

PAYE

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

  • by reason of an event affecting the market value of employment-related securities held by an employee
  • an amount counts as employment income of that employee by reason of Part 7 Chapter 3B

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 3B if the relevant event occurs on a day before 1 September 2003.