Shares or securities may have certain rights to convert into other types of shares or securities on specific events or may be subject to certain conditions. Where the securities are also employment related securities (ERS), they may be considered to be ‘convertible securities’ under ITEPA 2003, ss 435–444 (Pt 7, Ch 3). See the Employment related securities overview note for the definition of ERS.
On conversion, the value of the shares or securities may increase so that the holder makes a notional gain or can sell the new securities for a real gain.
Where the rules on convertible securities apply, income tax and potentially NIC are charged on a gain (or notional gain) where certain chargeable events occur.
It is important to note that convertible securities might also be restricted securities (see the Restricted securities guidance note). If the securities also fall within the scope of the restricted securities rules, treating the securities as restricted securities and using a section 431 election may minimise the overall liability.
Foreign exchange issuesOverview of foreign exchange provisionsForeign exchange (FX) movements are generally taxed following the rules applicable to the underlying income, expenditure, asset or liability on which they arise, broadly as follows:Capital assetsOn a realisation basis (ie on disposal)
What are connected companies for loan relationship purposes ― practical approachBrief overview of the rulesThe loan relationships legislation applies to any ‘money debt’ arising from the lending of money entered into by a company, either as a lender or borrower. The rules are contained in CTA 2009,
Married couple’s allowanceThe married couple’s allowance (MCA) is only available if one of the two spouses or civil partners was born before 6 April 1935. This means that one member of the couple must be at least 89 years old on 5 April 2024 to qualify for an allowance in the 2023/24 tax year.There