Income Tax (Earnings and Pensions) Act 2003 section 456

Cases outside charge under section 453

Section 456 identifies the circumstances in which a disposal of shares will not trigger a tax charge under section 453, either because a more specific charge applies or because the employee's connection with the company is insufficiently close.

• If a disposal gives rise to a charge under section 427 (conditional interests in shares), no charge arises under section 453 — the more specific charge under section 427 takes priority over the more general provision.
• An employee is exempt from the section 453 charge if they have not been a director or employee of the company, or of an associated company, at any point in the seven years before the company became a dependent subsidiary.
• Where both section 427 and section 453 could potentially apply to the same disposal, only the section 427 charge is triggered.
• The exemption based on the employee's service history is a true exception — it looks at the individual's actual role rather than simply at who originally acquired the shares.