Income Tax (Earnings and Pensions) Act 2003 section 430A

Application of this Chapter where securities exchanged for further securities

Section 430A provides rollover relief from income tax when employment-related restricted securities are exchanged for other restricted securities, ensuring that the tax treatment of the original securities carries over to the replacement securities under certain conditions.

• Where restricted securities ("old securities") are exchanged entirely for other restricted securities ("new securities"), no income tax arises on the exchange, and the new securities inherit the tax treatment of the old ones
• Where the consideration for old securities is a mix of new securities and other consideration (such as cash), only the new securities portion qualifies for rollover relief — the non-securities portion triggers a proportionate taxable charge
• Any elections previously made in respect of the old securities to disapply certain restricted securities charging provisions carry over to the new securities, and the calculations used to determine any future tax charge are adjusted to reflect the history of the old securities
• Special rules apply where the old securities were originally exempt from tax on acquisition because they were subject to forfeiture within five years — if a forfeiture restriction on the new securities is not removed within five years of the original acquisition of the old securities, it is deemed to be removed at that five-year point, triggering a tax charge