Part 7Employment income: income and exemptions relating to securities

F1Chapter 2Restricted securities

Tax charge on post-acquisition chargeable events

429Case outside charge under section 426

(1)

Section 426 (charge on occurrence of chargeable event) does not apply if—

(a)

the employment-related securities are shares (or an interest in shares) in a company of a class,

(b)

the provision by virtue of which the employment-related securities are restricted securities, or a restricted interest in securities, applies to all the company’s shares of the class,

F2(ba)

subsection (1A) is satisfied,

(c)

all the company’s shares of the class (other than the employment-related securities) are affected by an event similar to that which is a chargeable event in relation to the employment-related securities, and

(d)

subsection (3) or (4) is satisfied.

(1A)

F3This subsection is satisfied unless something which affects the employment-related securities has been done (at or before the time when section 426 would apply) as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.

(2)

For the purposes of subsection (1)(c) shares are affected by an event similar to that which is a chargeable event in relation to the employment-related securities—

(a)

in the case of a chargeable event within section 427(3)(a) (lifting of restrictions), if the provision mentioned in subsection (1)(b) ceases to apply to them,

(b)

in the case of a chargeable event within section 427(3)(b) (variation of restriction), if that provision is varied in relation to them in the same way as in relation to the employment-related securities, or

(c)

in the case of a chargeable event within section 427(3)(c) (disposal), if they are disposed of.

(3)

This subsection is satisfied if, immediately before the event that would be a chargeable event, the company is employee-controlled by virtue of holdings of shares of the class.

(4)

This subsection is satisfied if, immediately before that event, the majority of the company’s shares of the class are not F4employment-related securities.

F5(5)

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