ERSM40320 - Convertible Securities

Old regime: convertible shares acquired before 17 March 1998

Where convertible shares have been received by reason of employment before 17 March 1998 an income tax charge under the normal rules for employment income will only apply before 1 September 2003 if the exercise of the conversion rights is within the charge under ITEPA03/S476 (securities options), as the exercise of a right to acquire shares, or there is evidence that the conversion opportunity itself arises from or by reason of the employment.

If on the facts of a particular case you consider that a charge may arise in these circumstances, advice is available from the Employee Shares & Securities Unit, Room G/52, 100 Parliament Street, London, SW1A 2BQ, or email shareschemes@hmrc.gsi.gov.uk.

Shares becoming convertible

Where shares received by reason of employment before 17 March 1998 become convertible after that date a charge under ITEPA03/S438 as originally enacted will not arise on conversion. In such cases there may be a charge under ITEPA03/S447 on a benefit in connection with an employment-related security.