ERSM20370 - Employment-related securities and options: exclusions: public offers
Pre-18 June 2004
Up to 17th June 2004 Chapters 2 to 4 do not apply in relation to employment-related securities that are shares acquired under the terms of an offer to the public.
18 June 2004 onwards
As from 18 June 2004 only the following chapters do not apply in relation to employment-related securities that are shares acquired under the terms of an offer to the public:
- Chapter 2 restricted securities
- Chapter 3 convertible securities
- Chapter 3C securities acquired for less than market value
No relief if avoidance
There is a further “purpose test” so that those Chapters are not disapplied if the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity under which the shares were acquired, or for which the shares are held, is the avoidance of tax or national insurance contributions (ITEPA03/S421F (1A).
Priority share allocation to employees
Where there is exemption for priority share allocations to employees under ITEPA03/S544 any acquisition made under either the public offer or the employee offer is to be treated as made under the terms of an offer to the public. See ERSM200000.
This applies whether or not there is any benefit within subsection (2) of ITEPA03/S544 (benefit derived from entitlement to priority allocation exempt from income tax).