Where an employee is provided with, or otherwise receives, a
readily convertible asset, the income likely to be PAYE income will
be the money’s worth of the asset. That is, the amount the
employee can obtain for the asset by selling it or otherwise
turning it to cash, less any contribution the employee makes
towards the cost of the asset.
For example, where an employee is awarded shares, which are
readily convertible assets, at below market value, the employer
must take account of any amount paid by the employee for the
shares, before deciding the amount on which to operate PAYE.
For assets provided under non-cash remuneration arrangements,
the employer may operate PAYE on the precise amount obtained by the
employee, because the asset (for example, platinum sponge) is
usually sold at market value shortly after transfer to the employee
and before the time when employer is obliged to operate PAYE. If,
exceptionally, the asset is not quickly sold, then the employer
will have to estimate the amount based on a market value for the
asset on the day it was provided.
For shares listed on a recognised investment exchange (see
EIM11901) or the New York Stock Exchange
(see
EIM11903), PAYE should be operated on
the market value on the date of award. This value should be
available from published sources.
When an employee is awarded unquoted or restricted shares it
may be more difficult for the employer to operate PAYE on a
definite figure and in this instance it may be necessary to adopt a
reasonable best estimate (see
EIM11892).
