Income Tax (Earnings and Pensions) Act 2003 section 421B

Application of Chapters 2 to 4A

Section 421B defines when the employment-related securities rules in Chapters 2 to 4A apply, how acquisition is determined, and the circumstances under which those rules cease to apply.

• Chapters 2 to 4A apply where securities or an interest in securities are acquired because of a person's employment (including former or prospective employment), with acquisition occurring at the point of beneficial entitlement rather than physical transfer.
• A right or opportunity to acquire securities provided by an employer or a connected person is presumed to be employment-related, unless the provider is an individual acting within normal domestic, family or personal relationships.
• The rules cease to apply when the securities are disposed of to a non-associated person, immediately before the employee's death, or seven years after the employee stops being employed by the employer, the issuing company, or any connected person.
• Key defined terms — "the acquisition", "the employment", and "employment-related securities" — establish the framework for interpreting the provisions throughout Chapters 2 to 4A.