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

Amount treated as income

Section 446Y sets out how to calculate the amount treated as employment income when employment-related securities are disposed of for more than their market value.

• Where this chapter applies, the excess of disposal consideration over market value (less disposal expenses) counts as employment income.
• The income is taxed in the tax year in which the disposal takes place.
• The formula is CD − MV − DA, where CD is the disposal consideration, MV is the market value at disposal, and DA is disposal expenses.
• Only the net profit element above market value, after deducting costs of disposal, is charged to income tax as employment income.