Part 7

Employment income: income and exemptions relating to securities
Chapter 2

Restricted securities

Tax exemption on acquisition

No charge in respect of acquisition in certain cases
425
1
Subsection (2) applies if the employment-related securities—
a
are restricted securities, or a restricted interest in securities, by virtue of subsection (2) of section 423 (provision for transfer, reversion or forfeiture) at the time of the acquisition, and
b
will cease to be restricted securities, or a restricted interest in securities, by virtue of that subsection within 5 years after the acquisition (whether or not they may remain restricted securities or a restricted interest in securities by virtue of the application of subsection (3) or (4) of that section).
2
No liability to income tax arises in respect of the acquisition, except as provided by—
a
Chapter 3 of this Part (acquisition by conversion),
b
Chapter 3C of this Part (acquisition for less than market value), or
c
Chapter 5 of this Part (acquisition pursuant to securities option).
3
But the employer and the employee may elect that subsection (2) is not to apply to the employment-related securities.
4
An election under subsection (3)—
a
is to be made by agreement by the employer and the employee, and
b
is irrevocable.
5
Such an agreement—
a
must be made in a form approved by
the Commissioners for Her Majesty’s Revenue and Customs
, and
b
may not be made more than 14 days after the acquisition.
6
No election may be made under subsection (3) unless, at the time of the acquisition, the earnings from the employment are (or would be if there were any) general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies.
Pt. 7 Ch. 2 substituted (1.9.2003 with effect in accordance with Sch. 22 para. 3(2)-(4) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 3(1); S.I. 2003/1997, art. 2
Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)
S. 425(6) inserted (with effect in accordance with Sch. 9 para. 48 of the amending Act) by Finance Act 2014 (c. 26), Sch. 9 paras. 9, 47
Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 102(2); S.I. 2005/1126, art. 2(2)(h)
Pt. 7 heading substituted (with effect in accordance with Sch. 22 para. 2(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 2(1)