Part 7

Employment income: income and exemptions relating to securities
Chapter 3

Convertible securities

Tax charge on post-acquisition chargeable events

Case outside charge under section 438
443
1
Section 438 (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
all the company’s shares of the class are convertible securities,
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
This subsection is satisfied unless something which affects the employment-related securities has been done (at or before the time when section 438 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 439(3)(a)
(conversion), if they are converted into securities of a different description,
b
in the case of a chargeable event within section 439(3)(b)
(disposal), if they are disposed of,
c
in the case of a chargeable event within section 439(3)(c)
(release of entitlement to convert), if the entitlement to convert them into securities of a different description is released, or
d
in the case of a chargeable event within section 439(3)(d)
(receipt of benefit), if a similar benefit is received in respect of the entitlement to convert them.
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
employment-related securities.
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)
S. 443(5) repealed (with effect in accordance with s. 86(8) of the amending Act) by Finance Act 2004 (c. 12), Sch. 42 Pt. 2(11)
Pt. 7 Ch. 3 substituted (1.9.2003 with effect in accordance with Sch. 22 para. 4(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 4(1); S.I. 2003/1997, art. 2
S. 443(1)(ba) inserted (retrospective to 7.5.2004) by Finance Act 2004 (c. 12), ss. 86(2)(b)(3)(8), 86(1)
S. 443(1A) substituted (with effect in accordance with Sch. 2 para. 11(2) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 11(1)
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)
Words in s. 443(4) substituted (retrospective to 7.5.2004) by Finance Act 2004 (c. 12), ss. 86(2)(b)(5)(8), 86(1)