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

Pre-acquisition avoidance cases

Section 446UA is an anti-avoidance provision that overrides the normal notional loan treatment where employment-related securities are acquired below market value and the arrangements were primarily designed to avoid tax or national insurance contributions.

• Where the main purpose (or one of the main purposes) of the arrangements for acquiring employment-related securities is tax or NICs avoidance, the normal notional loan rules do not apply
• Instead of spreading the benefit over time through a notional loan mechanism, the full amount is taxed immediately as employment income
• The amount charged as employment income equals what would otherwise have been the initial notional loan outstanding
• The charge arises in the tax year in which the securities are actually acquired