ERSM40070 | Convertible securities: how to calculate the taxable amount

s440 & s442 Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

The taxable amount is, per s440 Chapter 3 Part 7 ITEPA 2003,

AG-CE

where:

AG is the amount of any gain arising from a chargeable event (see ERSM40080), and

CE is:

• the amount of any consideration given by the employee (or associated person) for the entitlement to convert, plus

• the amount of any expenses incurred by the holder of the securities in connection with each chargeable event

Consideration given includes the excess of consideration given to acquire the original securities over the market value of the securities when they were acquired, determined as if they were not convertible. (s442 ITEPA)