SE11803 - PAYE avoidance: readily convertible assets

S203F(2) ICTA 1988

The definition of a readily convertible asset

The definition of a readily convertible asset in Section 203F(2) comprises:

• an asset that can be sold on a recognised investment exchange or on the London Bullion Market (see SE11804); or
• an asset that can be sold on a market specified in PAYE regulations (see SE11805); or
• a money debt (see SE11806); or
• an asset held subject to a fiscal warehousing regime, such as a bonded warehouse (see SE11807); or
• an asset that is likely to realise money without any action required by the employee (see SE11808); or
• an asset for which trading arrangements exist (see SE11810); or
• an asset for which trading arrangements are likely to exist in future (see SE11811).

Operation of the Section 203F(2) definition of readily convertible asset

To determine whether an asset provided to an employee by an employer is a readily convertible asset, start by considering whether the asset comes within the first definition in subsection (a). If the asset is capable of sale on a recognised investment exchange the definition of readily convertible asset is satisfied and there is no need to consider any subsequent definitions.

If the asset is not capable of sale on a recognised investment exchange you should consider the next definition in subsection (b) – sale on a market specified in PAYE regulations – and so on. If after full consideration, the asset does not satisfy any of the seven definitions of readily convertible asset in subsections (a)-(g), there is no obligation on the employer to operate PAYE under Section 203F.