SE11851 - PAYE avoidance: shares as readily convertible assets

Section 203F ICTA1988 – shares exclusion before 27 November 1996

Share awards before 27 November 1996

From 25 May 1994 Section 203F ICTA1988 required employers to operate PAYE on awards of tradeable assets.

In principle there is no difference between an employer awarding tradeable assets to an employee in the form of shares or in gold bars, platinum sponge, etc. and consequently where shares satisfied the definition of tradeable assets, the employer would be obliged to operate PAYE.

However, before 27 November 1996 there was an exclusion from Section 203F

• where an employer provided an employee with shares in an Inland Revenue approved share scheme; or
• where an employer provided an employee with shares in the employer, or associated, company (“own company” shares); or
• where an employee acquired shares on exercise of an option granted before 27 November 1996.

Effectively most share awards remained outside PAYE because of these exclusions from the definition of tradeable asset which applied until 26 November 1996.