SE11804 - PAYE avoidance: readily convertible assets

Section 203F(2)(a) ICTA 1988

Readily convertible asset – recognised investment exchange

If an employer provides an employee with an asset that can be sold, or otherwise realised, on a recognised investment exchange or on the London Bullion Market, that asset is a readily convertible asset and the employer is obliged to operate PAYE.

Currently there are less than a dozen recognised investment exchanges worldwide. The best known are the London Stock Exchange and NASDAQ (North American Securities and Derivatives exchange).

Consequently an award of shares in any company listed on the London Stock Exchange, or on NASDAQ, represents assessable income in the form of readily convertible assets. Similarly any asset, such as a gold bar, capable of sale on the London Bullion Market is a readily convertible asset.

This definition of a readily convertible asset is unchanged from the previous definition of a tradeable asset (see SE12011) introduced in 1994 which included assets traded on a recognised investment exchange. See example SE11821.