Income Tax (Earnings and Pensions) Act 2003 section 696

Readily convertible assets

Section 696 requires employers to treat PAYE income provided to an employee in the form of a readily convertible asset as though it were a cash payment, and sets out how the amount of that notional payment is determined.

• When PAYE income is provided as a readily convertible asset, the employer must treat it as a cash payment for PAYE purposes
• The amount of the deemed payment is the best reasonable estimate of the income likely to be subject to PAYE in respect of that asset
• A readily convertible asset is one that can be easily turned into cash, as defined elsewhere in the Act (section 702)
• This treatment does not apply where the income falls within the disguised remuneration rules under Chapter 2 of Part 7A