C2.811 Disposal of securities acquired after 31 August 2003
The legislation relating to shares acquired through employment (or through holding an office) was overhauled by FA 2003 (see E4.501–E4.508R). It is important to note that the legislation now applies not just to shares but to 'employment-related securities', and that there is a wide definition of 'security' (see E4.507A).
The basic rule relates to restricted securities or a restricted interest in securities (see E4.507B, E4.507) and to convertible securities or an interest in convertible securities (see E4.507G)1. Consideration for acquisition is taken to be the sum of:
• the actual amount, or value, given, and
• any amount that fell to be treated as earnings (under ITEPA 2003, s 62 (Pt III, Ch 1)) on acquisition
In the case of employee shareholder shares (see C3.1909) consideration is the amount to be treated as earnings under ITEPA 2003, s 62 (Pt 3, Ch 1) or ITEPA 2003, s 226A (see E4.592, E4.591). No other consideration is treated as having been given2.
This rule applies only to the individual making the acquisition. It does not apply in calculating the consideration received by the person providing the employment-related securities3.
The rule applies to acquisitions on or after 1 September 2003, the appointed day in relation to the FA 2003 employment-related securities regime4.
Further legislation was introduced to deal with the acquisition of shares after 1 December 2004 in research institute spin-out companies. The income tax consequences are described in E4.508AA–E4.508AD; they impose a charge to income tax on the