Part 7

Employment income: income and exemptions relating to securities
Chapter 3A

Securities with artificially depressed market value

Other tax charges

Charge on restricted securities
446E
1
This section applies where the market value of employment-related securities which are restricted securities or a restricted interest in securities is artificially low—
a
immediately after an event which is a chargeable event in relation to the employment-related securities for the purposes of section 426 (charge on restricted securities),
aa
immediately before the employment-related securities are disposed of (in circumstances which do not constitute such an event) or are cancelled without being disposed of,
or
b
on 5th April in any year.
2
The market value of the employment-related securities is artificially low where it has been reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes within the relevant period.
3
“
The relevant period
”is the period beginning—
a
if section 425(2)
(no charge on acquisition of certain restricted securities or restricted interests in securities) applied in relation to the employment-related securities, 7 years before the acquisition, and
b
in any other case, 7 years before the relevant date,
and ending with the relevant date.
4
“
The relevant date
”is—
a
in a case within subsection (1)(a), the date on which the chargeable event concerned occurs,
b
in a case within subsection (1)(aa), the date on which the disposal or cancellation concerned occurs, and
c
in a case within subsection (1)(b), the 5th April concerned.
5
Where this section applies in a case within subsection (1)(aa) or (b), a chargeable event within section 427(3)(a)
(lifting of restrictions) is to be treated as occurring in relation to the employment-related securities on the relevant date.
6
In every case where this section applies, subsection (1) of section 428 (amount of charge on restricted securities) applies as if the reference in subsection (2) of that section to what would be the market value of the employment-related securities immediately after the chargeable event but for any restrictions were to what would be their market value at the appropriate time but for the matters to be disregarded.
7
“
The appropriate time
”is—
a
in a case within subsection (1)(a) or (b), the time immediately after the chargeable event concerned, and
b
in a case within subsection (1)(aa), the time immediately before the chargeable event concerned.
8
“The matters to be disregarded” are—
a
any restrictions,
b
the things done as mentioned in subsection (2), and
c
if the employment-related securities are about to be disposed of or cancelled, that fact.
9
Where this section applies in a case within subsection (1)(aa), section 428(1) applies with the omission of the reference to OP.
10
Where this section applies in a case within subsection (1)(a) and the chargeable event concerned is within section 427(3)(c)
(disposal for consideration), section 428 applies with the omission of subsection (9)
(case where consideration is less than actual market value).
Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)
Pt. 7 Ch. 3A inserted (16.4.2003 with effect in accordance with Sch. 22 para. 5(2)-(4) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 5(1)
S. 446E(1)(aa) inserted (retrospective to 7.5.2004) by Finance Act 2004 (c. 12), s. 87(2)(4) (with s. 87(5))
Ss. 446E(3)-(10) substituted for (retrospective to 7.5.2004) by Finance Act 2004 (c. 12), s. 87(3)(4) (with s. 87(5))
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)