Income Tax (Earnings and Pensions) Act 2003 section 423

"Restricted securities" and "restricted interest in securities"

Section 423 defines what makes employment-related securities "restricted securities" or a "restricted interest in securities" for the purposes of this chapter of the Act.

• Securities are "restricted" if there is a contract, agreement, arrangement or condition that reduces their market value below what it would otherwise be
• Restrictions include provisions where securities may be transferred back, reverted or forfeited in certain circumstances, causing the holder to lose beneficial ownership without receiving full unrestricted market value
• Restrictions also include limitations on the holder's freedom to dispose of the securities or their sale proceeds, to retain them, or to exercise any other rights the securities confer
• Restrictions further include any provision where disposing of, retaining or exercising rights over the securities may result in a disadvantage to the holder, the employee or any connected person