Income Tax (Earnings and Pensions) Act 2003 section 554Z3

Value of relevant step

Section 554Z3 sets out the general rules for determining the taxable value of a relevant step taken under the disguised remuneration rules in Part 7A of ITEPA 2003.

• Where the relevant step involves a sum of money, its value is simply the amount of that sum
• Where the step involves an asset rather than cash, the value is the higher of the asset's market value at the time the step is taken and the cost of taking the step
• In certain cases — such as where the step involves making an asset available and the employment-related securities rules in Part 7 already apply, or where section 554Z7 (share option exercise price) applies — the cost comparison is disregarded
• The initial value arrived at may then be adjusted by sections 554Z4 to 554Z8, which deal with residence, overlap with earlier steps, overlap with other earnings, share option exercise prices, and consideration given for the step, applied in that order