| Financial Benefits to Encourage Employee Participation |
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16A.4.2 Securities with Artificially Enhanced Market Value, Chapter 3B |
This deals with securities acquired for less than market value. section 446L imposes a charge on the amount by which the value has been increased by artificial ie non-commercial means provided it is at least 10%. Artificiality is determined using the same words as for part 3A. Where the securities are ‘relevant’ restricted securities (relevance determined under section 446M (4)) the amount charged under section 446L is adjusted.71 |
Section 446N deals with the situation in which the securities have been relevant restricted securities during the relevant period and makes further deductions/adjustments to reflect the earlier charge on the chargeable event under section 428. |
16A.4.3 Securities Acquired for Less Than Market Value, Chapter 3C |
This deals with employment related securities acquired either for no payment at all or for a payment which is less than the market value. The rule is framed in terms of payment as opposed to consideration and expressly adds that any obligation to pay is ignored—only payments will do. Payment is not further defined so the position of consideration in non-monetary form is unclear.72 |
The effect is to create a notional loan of the underpayment (section 446S) and then make the relevant parts of the low interest loan rule in part 3 chapter 7 apply.73 The amount of the loan is determined under section 446T. Section 446U creates a further charge if the loan is treated as discharged where the employment related securities are disposed of to an associated person or there is a release of the obligation to pay. Release is then supplemented by ‘transferred or adjusted so as no longer to bind any associated person’. However the notional loan is also treated as ended |