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

Replacement and additional securities and changes in interests

Section 421D deals with how replacement or additional employment-related securities are taxed when they arise from conversions, transactions, or entitlements connected to existing securities, and how changes in the size of an interest in securities are treated.

• When original employment-related securities are converted or exchanged, any replacement securities acquired are treated as having been obtained through the same employment-related right or opportunity as the originals.
• Additional securities acquired by virtue of holding original employment-related securities are likewise treated as arising from the same employment-related right or opportunity.
• Any reduction in the market value of the original securities caused by the issue of replacement or additional securities is treated as consideration paid for those new securities.
• Any increase or reduction in an interest in securities is treated respectively as a separate interest acquired through the same employment right, or as a proportionate disposal of a separate interest.