EIM12400 - PAYE: Securities as readily convertible assets

Section 702 ITEPA 2003

With effect from 10 July 2003, Section 702(5A) to (5D) provide that an asset within the meaning of 鈥渟ecurities鈥� which is not otherwise treated as a readily convertible asset by virtue of Section 702(1) (see EIM11900) is to be treated as a readily convertible asset. The only exception is where the securities are shares that are not otherwise treated as a readily convertible asset and are corporation tax deductible.

Meaning of 鈥渟ecurities鈥�

For the purpose of Section 702, 鈥渟ecurities鈥� has the same meaning as in Part 7 Chapters 1 to 5 ITEPA 2003 given by Section 420 ITEPA 2003.

Shares that are corporation tax deductible

Shares are corporation tax deductible if they are acquired by a person:

  • by reason of that, or another person鈥檚, employment with a company, or
  • pursuant to an option granted by reason of that, or another person鈥檚, employment with a company

and the company is entitled to corporation tax relief in respect of the shares under Schedule 23 FA 2003.