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HMRC internal manual

Employment Related Securities Manual

Securities acquired for less than market value: shares acquired before 16 April 2003

Old regime


The legislation that is now Chapter 3C Part 7 ITEPA 2003 with effect from 16 April 2003 was originally in ICTA88/S162, which was rewritten as Chapter 8 Part 3 ITEPA 2003 from 6 April 2003. Legislative references below are to ITEPA as originally enacted.


ICTA88/S162 and, from 6 April 2003, Chapter 8 Part 3 ITEPA 2003 apply where -

  • shares in a company were, or an interest in shares in a company was, acquired before 16 April 2003 by an employee or a person connected with an employee; and
  • the right or opportunity to acquire the shares or interest in shares was available by reason of that employee’s employment.

Employee: definition

Employees and prospective employees were covered.

Shares: definition

Shares included stock and any securities defined in ICTA88/S254 (1) - broadly shares and company loan stock - see ITEPA03/S197 (1) as originally enacted. The shares could be shares in the employer or any other company.

By reason of employment: extended definition

The shares had to be acquired by reason of employment, but there was an early version of the current deeming provisions. Subsection (3) of ITEPA03/S162 says -

A right or opportunity to acquire shares or an interest in shares which is made available by the employer is to be regarded as made available by reason of the employment unless -

  • the employer is an individual, and
  • the right or opportunity is made available in the normal course of the employer’s domestic, family or personal relationships.

ICTA88/S168 (3) contained a similar deeming provision which applied prior to 6 April 2003.

What is charged and how is it charged

See ERSM71010.