Readily convertible assets

Produced by Tolley in association with Andrew Rainford

The following Employment Tax guidance note Produced by Tolley in association with Andrew Rainford provides comprehensive and up to date tax information covering:

  • Readily convertible assets
  • Background
  • Definition
  • Calculation of liability
  • Tax on employee’s tax charge

Readily convertible assets


Tax and National Insurance liabilities on the acquisition of shares and securities must be accounted for through PAYE where the underlying shares are readily convertible into cash. This also extends to various other liabilities under the employment-related securities legislation. The legislation on readily convertible assets is at ITEPA 2003, ss 696–702.

The legislation for income tax and NIC in this area is now for all practical purposes the same, so if income tax is payable, both employer’s and employee’s NIC also has to be paid over to HMRC, under PAYE.

For income tax purposes, HMRC’s guidance is at EIM11900 and the NIC equivalent is at NIM06835.


The definition of a readily convertible asset brings into charge to PAYE gains on an asset capable of being sold or otherwise realised on:

  1. a recognised investment exchange (within the meaning of the Financial Services and Markets Act 2000)

  2. the London Bullion Market

  3. the New York Stock Exchange

  4. a market for the time being specified in PAYE regulations

ITEPA 2003, s 702

The definitions of exchanges are not critical because of the way this legislation is then extended.

PAYE must also be charged on “anything that is likely

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