Income Tax (Earnings and Pensions) Act 2003 section 431

Election for full or partial disapplication of this Chapter

Section 431 allows employers and employees to jointly elect to have restricted securities taxed at their unrestricted market value on acquisition, either fully or partially disapplying the restricted securities charging rules in sections 425 to 430.

• A full election values the shares as if no restrictions existed and switches off the Chapter 2 charging provisions entirely, so no further tax charge arises when restrictions are later lifted
• A partial election ignores only specified restrictions for valuation purposes while keeping the remaining Chapter 2 rules in force for any restrictions not covered by the election
• The election must be made jointly by the employer and the employee, in an HMRC-approved form, within 14 days of the acquisition — and once made it cannot be revoked
• The election is only available where, at the time of acquisition, the employment earnings are (or would be) general earnings subject to tax under the charging provisions for UK-based or internationally mobile employees

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