ITEPA03/S446L imposes an annual charge where the market value of employment-related securities at the valuation date is greater by at least 10% as a result of things done otherwise than for genuine commercial purposes (see ERSM60020).
The taxable amount will be employment income of the employee for the tax year in which the valuation date falls. It is:
IMV – MV
where:
IMV (increased market value) is the market value of the employment-related securities on the valuation date, and
MV (market value) is the amount that would be the market value of the employment- related securities on the valuation date if any non-commercial increases during the relevant period were disregarded.
“Non-commercial increase” means an increase in the
market value as a result of anything done otherwise than for
genuine commercial purposes.
The following are disregarded in arriving at the values:
The relevant period in any year runs from the later of:
to the earlier of:
Securities acquired before 16 April 2003 are treated as acquired on that date (ITEPA03/SCH22/PARA6 (4)).
This is the date on which the “relevant period” ends.
See ERSM60110. See also Example 4 of ERSM61070, which demonstrates the transition from the dependent subsidiary regime.
See ERSM60120 for details as to how this charge is modified for restricted securities.
FA04/S88 repealed ITEPA03/S421G (exclusion from Chapters 2 to 4 of Part 7 of shares awarded or acquired under an approved plan or scheme) with effect from 18 June 2004 and applies to shares acquired both before, on and after that date. But for determining any relevant period, such shares are treated as if they were acquired on 18 June 2004.
FA04/S89 modified ITEPA03/S421F (exclusion for shares acquired under the terms of an offer to the public – see ERSM20370) with effect from 18 June 2004 and applied to shares acquired before that date. For determining any relevant period, such shares are treated as if they were acquired on 18 June 2004.
