Income Tax (Earnings and Pensions) Act 2003 section 441

Amount of gain realised on occurrence of chargeable event

Section 441 sets out how to calculate the taxable gain when a chargeable event occurs in relation to convertible employment-related securities.

• On conversion, the gain is the market value of the new securities minus the market value of the old securities (ignoring their convertible feature) and any consideration paid for the conversion
• On disposal, the gain is the disposal proceeds minus the market value of the securities (ignoring their convertible feature); on release of conversion rights, the gain is whatever consideration is received; and on receipt of a benefit, the gain is the amount or market value of that benefit
• Where the securities are an interest in securities rather than whole securities, market values are calculated as a proportionate share of the full security value
• The gain may be reduced (but not below nil) where the securities were previously subject to a disguised remuneration charge under Part 7A and the amount already taxed as employment income exceeds the non-convertible market value of the securities at that time