Income Tax (Earnings and Pensions) Act 2003 section 446R

Case outside this Chapter

Section 446R sets out the circumstances in which the rules in Chapter 3C (securities acquired for less than market value) do not apply to certain shares acquired by employees.

• The exemption applies where the employment-related securities are shares (or an interest in shares) of a particular class in a company, and all shares of that class were acquired either for nothing or for less than market value.
• The exemption is lost if something has been done affecting the securities as part of a scheme or arrangement whose main purpose (or one of its main purposes) is the avoidance of tax or national insurance contributions.
• One of two additional conditions must also be met: either the company is employee-controlled by virtue of holdings of shares of that class, or the majority of shares of that class are not employment-related securities.
• Where shares of the relevant class are not fully paid up, their market value is determined as though they were fully paid up.