Income Tax (Earnings and Pensions) Act 2003 section 446I

Adjustment of consideration or benefit received

Section 446I adjusts the value of consideration or benefits received where they consist of securities whose market value has been artificially depressed, ensuring that income tax charges under various employment-related securities provisions are calculated on an undepressed value.

• Where consideration or benefits under various employment-related securities charges are paid in the form of securities whose market value has been artificially reduced, this section requires an upward adjustment to the value used for tax purposes.
• Securities are treated as having an artificially low market value if their value has been reduced by at least 10% as a result of actions taken otherwise than for genuine commercial purposes within the 7 years before the consideration or benefit was received.
• The adjustment applies across multiple employment-related securities tax charges, including those on restricted securities, convertible securities, securities with artificially depressed market value, securities disposed of for more than market value, and post-acquisition benefits from securities.
• The market value used for the relevant tax calculation is taken to be the amount it would have been without the artificial reduction, effectively reversing the effect of any depreciatory transactions.