Income Tax (Earnings and Pensions) Act 2003 section 438

Charge on occurrence of chargeable event

Section 438 establishes the income tax charge that arises when a chargeable event occurs in relation to convertible employment-related securities, such as when shares are converted into shares of a different class.

• When a chargeable event occurs in relation to convertible employment-related securities, the resulting taxable amount is treated as the employee's employment income for the tax year in which the event takes place.
• The taxable amount is calculated in accordance with the rules set out in section 440, and what constitutes a chargeable event is defined in section 439.
• Relief may be available where the employee has met the cost of the employer's secondary Class 1 National Insurance contributions, reducing the amount charged as employment income.
• Certain circumstances may fall outside the scope of this charge, as provided for by section 443.