| Financial Benefits to Encourage Employee Participation |
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related securities—see §16A.2 above.37 FA 2003 makes the whole application of chapter 2 a matter of election but only in the interest of paying the tax up front (see below). |
There are elaborate rules as to when securities are restricted.38 There are also exceptions where the securities are subject to forfeiture for misconduct or for other permitted reasons.39 |
If the condition attached to the securities must be satisfied (or not) within 5 years there will be no charge on the acquisition of the securities.40 The exclusion from charge on acquisition does not prevent any liability arising under chapters 3 (acquisition by conversion), 3C (the new rule on acquisition for less than market value) or 5 (acquisition by exercise of a share option). However FA 2003 allows the employer and employee jointly to elect irrevocably that the charges under 3, 3C and 5 do not apply.41 |
There will however be a charge on the occurrence of a chargeable event, if and when the holding becomes unrestricted or on any earlier sale of the securities or any interest in them.42 The charge is on a portion of the market value of the shares (when the holding becomes unconditional or prior disposal) less allowable deductions.43 Any liability on the grant of the shares will be taken into account to prevent a double charge.44 There is an exclusion from this charge if the employment related securities are shares in a class, the restriction applies to all |