If an employer provides an employee with an asset that can be
sold, or otherwise realised, on the New York Stock Exchange (NYSE),
that asset is a readily convertible asset and the employer is
obliged to operate PAYE.
The NYSE is not a recognised investment exchange. So Section
702(1)(a)(iii) ITEPA 2003 ensures that an award of shares in any
company listed on the NYSE represents payment of PAYE income in the
form of readily convertible assets.
In some circumstances shares may be subject to restrictions on
their sale at the time of the award. For example, some stock
purchase plans operated by companies in the United States of
America prohibit employees from selling shares acquired under the
plan for one year from the date of acquisition.
Where shares that are listed on the NYSE are issued subject
to a restriction on sale, the shares will be readily convertible
assets at the time of acquisition because the shares are capable of
being realised on a recognised investment exchange. However the
value of the shares for the purposes of
determining both the amount chargeable to tax as employment income
and the amount on which the employer must operate PAYE will reflect
the restriction on sale.
