EIM12400 - PAYE: Securities as readily convertible assets

Section 702 ITEPA 2003

With effect from 10 July 2003, Section 702(5A) to (5D) provide that an asset within the meaning of “securities” which is not otherwise treated as a readily convertible asset by virtue of Section 702(1) (see EIM11900) is to be treated as a readily convertible asset. The only exception is where the securities are shares that are not otherwise treated as a readily convertible asset and are corporation tax deductible.

Meaning of “securities”

For the purpose of Section 702, “securities” has the same meaning as in Part 7 Chapters 1 to 5 ITEPA 2003 given by Section 420 ITEPA 2003.

Shares that are corporation tax deductible

Shares are corporation tax deductible if they are acquired by a person:

  • by reason of that, or another person’s, employment with a company, or
  • pursuant to an option granted by reason of that, or another person’s, employment with a company

and the company is entitled to corporation tax relief in respect of the shares under Schedule 23 FA 2003.