SolvedERSM170100 | PAYE & NICs:Special charges on employment related securities
From HM Revenue & Customs · Employment Related Securities Manual
Special charges on employment-related securities
All the specific charges in Chapters 2 to 4 Part 7 ITEPA 2003 are potentially treated as notional payments on the relevant date and subject to PAYE. They are:
section 426 (chargeable events in relation to restricted securities and restricted interests in securities) with effect from 1 September 2003 – see ERSM30390,
section 438 (chargeable events in relation to convertible securities and interests in convertible securities) with effect from 1 September 2003 – see ERSM40060,
section 446B (charge on acquisition where market value of securities or interest artificially depressed) – see ERSM50100,
section 446L with effect from 1 September 2003 (charge where market value of securities artificially enhanced) – see ERSM60100,
section 446U with effect from 1 September 2003 (securities or interest acquired for less than market value: charge on discharge of notional loan) – see ERSM70140,
section 446UA (securities or interest acquired for less than market value: charge in avoidance cases) with effect from 2 December 2004 – see ERSM70200,
section 446Y (charge where securities or interest disposed of for more than market value) with effect from 1 September 2003 – see ERSM80030, and
section 447 (chargeable benefit from securities or interest) with effect from 1 September 2003 – see ERSM90020.
Where readily convertible assets
Where the employment-related securities, in respect of which the charge arose, are readily convertible assets (RCA) (see ERSM170020), then PAYE should be operated.
Where not readily convertible assets
If the employment-related securities, in respect of which the charge arose, are not RCA (see ERSM170020), but the amount counts as income by virtue of:
section 427(3)(c),
section 439(3)(b), (c), or (d),
section 446Y, or
section 447 - and the whole or any part of the consideration or benefit takes the form of a money payment then PAYE should be applied to that payment.
Where the consideration or benefit consists in the provision of an asset then PAYE should be applied if that asset is a RCA.
Relevant date
The “relevant date” means for charges under:
section 427(3)(c) – the date of disposal of restricted securities for consideration,
section 439(3)(b) – the date of disposal of convertible securities for consideration,
section 439(3)(c) – the date of release of entitlement to convert for consideration,
section 439(3)(d) – the date of receipt of benefit in connection with convertible securities,
section 446Y – the date of disposal of securities for consideration of more than market value, or
section 447 – the date of receipt of benefit in connection with securities, and
the whole or any part of the consideration or benefit concerned takes the form of a payment or consists in the provision of an asset, which is itself a RCA.
section 426 or 438, the date on which the chargeable event in question occurs,
section 446B, the date of the acquisition of the securities or interest in securities in question,
section 446L, the valuation date in question,
section 446U, the date on which the notional loan in question is treated as discharged,
section 446UA, the date of the acquisition of the securities or interest in securities in question,
section 446Y, the date of the disposal of the securities or interest in securities in question, and
section 447, the date on which the benefit in question is received.