Income Tax (Earnings and Pensions) Act 2003 Schedule 7 paragraphs 49–53

Convertible shares

Paragraphs 49 to 53 of Schedule 7 provide transitional rules for the tax treatment of convertible shares acquired by employees, with the key surviving provision exempting securities acquired before 17 March 1998 from the convertible securities charge.

• The rules on convertible securities (Chapter 3 of Part 7) do not apply to securities acquired before 17 March 1998.
• Paragraphs 50 to 53 have been repealed by the Finance Act 2003 and are no longer in force.
• The 17 March 1998 cut-off date acts as a grandfathering provision, protecting holders of older convertible securities from the employment-related securities income tax charge.
• If convertible securities were acquired on or after 17 March 1998, the full provisions of Chapter 3 of Part 7 apply, potentially giving rise to an income tax charge on conversion or disposal.