ERSM170100 – PAYE & NICs
Special charges on employment-related securities
All the specific charges in Chapters 2 to 4 Part 7 ITEPA 2003,
as amended by FA03/SCH22, are potentially treated as notional
payments on the relevant date and subject to PAYE. They are:
- section 426 (chargeable events in relation
to restricted securities and restricted interests in securities)
with effect from 1 September 2003 – see
ERSM30390,
- section 438 (chargeable events in relation
to convertible securities and interests in convertible securities)
with effect from 1 September 2003 – see
ERSM40060,
- section 446B (charge on acquisition where
market value of securities or interest artificially depressed)
– see
ERSM50100,
- section 446L with effect from 1 September
2003 (charge where market value of securities artificially
enhanced) – see
ERSM60100,
- section 446U with effect from 1 September
2003 (securities or interest acquired for less than market value:
charge on discharge of notional loan) – see
ERSM70140,
- section 446UA (securities or interest
acquired for less than market value: charge in avoidance cases)
with effect from 2 December 2004 – see
ERSM70200,
- section 446Y (charge where securities or
interest disposed of for more than market value) with effect from 1
September 2003 – see
ERSM80030, and
- section 447 (chargeable benefit from
securities or interest) with effect from 1 September 2003 –
see ERSM90020.
Where readily convertible assets
Where the employment-related securities, in respect of which the
charge arose, are readily convertible assets (RCA) (see
ERSM170020), then PAYE should be
operated.
Where not readily convertible assets
If the employment-related securities, in respect of which the
charge arose, are not RCA (see
ERSM170020), then PAYE should still be
operated if
- the amount counts as income by virtue
of
- section 427(3)(c) – disposal of restricted
securities for consideration,
- section 439(3)(b) – disposal of convertible
securities for consideration,
- section 439(3)(c) – release of entitlement
to convert for consideration,
- section 439(3)(d) – receipt of benefit in
connection with convertible securities,
- section 446Y – disposal of securities for
consideration of more than market value, or
- section 447 – receipt of benefit in
connection with securities, and
- the whole or any part of the consideration
or benefit concerned takes the form of a payment or consists in the
provision of an asset, which is itself a RCA.
PAYE is operated on the part that is regarded as RCA.
Relevant date
The “relevant date” means for charges under:
- section 426 or 438, the date on which the
chargeable event in question occurs,
- section 446B, the date of the acquisition
of the securities or interest in securities in question,
- section 446L, the valuation date in
question,
- section 446U, the date on which the
notional loan in question is treated as discharged,
- section 446UA, the date of the acquisition
of the securities or interest in securities in question,
- section 446Y, the date of the disposal of
the securities or interest in securities in question, and
- section 447, the date on which the benefit
in question is received.
