Income Tax (Earnings and Pensions) Act 2003 section 430

Election for outstanding restrictions to be ignored

Section 430 allows an employer and employee to jointly elect that, when a chargeable event occurs in relation to conditional shares, any remaining restrictions on those shares are disregarded for tax purposes, resulting in a higher immediate tax charge but removing the shares from future charges under the conditional shares rules.

• The employer and employee can jointly elect that the taxable amount on a chargeable event is calculated without deducting the value of any outstanding restrictions (the "OP" element), producing a higher upfront charge but taking the shares out of the conditional shares regime going forward.
• The election must be made by mutual agreement on an HMRC-approved form and is irrevocable once made.
• The agreement must be completed no later than 14 days after the chargeable event to which it relates.
• The election is only available where the employment earnings at the time of the chargeable event are, or would be, general earnings chargeable under Chapters 4 or 5 of Part 2 of the Act (broadly, earnings of UK-based or UK-working employees).