SE11802 – PAYE avoidance: readily convertible assets

Sections 203F, 203FA and 203FB ICTA 1988

Readily convertible assets - general

From 6 April 1998:

• Section 203F ICTA 1988 was amended to require employers to operate PAYE when providing employees with assessable income in the form of “readily convertible assets”(see SE11803)
• Sections 203FA (see SE11840) and 203FB (see SE11850) were introduced for the first time.

An obligation to operate PAYE under Section 203F existed before 6 April 1998, when employers provided employees with “tradeable assets”, but the definition of readily convertible asset replaces, and is wider than, the previous definition of tradeable asset because:

• for the first time a number of assets, or types of asset, are specifically included in the definition; and
• the definition of “trading arrangements” is extended.

With one important exception, the original rules on tradeable assets ( SE12010) continue to apply for awards of non-cash remuneration before 6 April 1998. The exception concerns awards of trade debts for which special rules took effect for awards from 2 July 1997 to ensure employers operated PAYE ( SE11806).