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HMRC internal manual

Employment Related Securities Manual

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HM Revenue & Customs
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Restricted Securities: Conditional shares acquired before 17 March 1998: transitional issues

Up until the mid-1990s it was accepted practice that if an employee acquired a conditional (forfeitable) share from his/her employer there was no charge to tax until the condition lifted or the share was disposed of. It was then decided that this was incorrect and there was a money’s worth charge on acquisition. Finance Act 1988 effectively restored the previous position with a new charging section 140A ICTA 1988 as from 17 March 1988 (becoming Chapter 2 Part 7 ITEPA 2003 as originally enacted). Tax Bulletin 35 (TB35) gives details of the transitional treatment of conditional shares acquired before 17 March 1998.