Section 425 — Finance Act 2003: No charge in respect of acquisition in certain cases

No charge in respect of acquisition in certain cases 425 1 Subsection (2) applies if the employment-related securities—

a are restricted securities, or a restricted interest in securities, by virtue of subsection (2) of section 423 (provision for transfer, reversion or forfeiture) at the time of the acquisition, and b will cease to be restricted securities, or a restricted interest in securities, by virtue of that subsection within 5 years after the acquisition (whether or not they may remain restricted securities or a restricted interest in securities by virtue of the application of subsection (3) or (4) of that section).

2 No liability to income tax arises in respect of the acquisition, except as provided by—

a Chapter 3 of this Part (acquisition by conversion),

b Chapter 3C of this Part (acquisition for less than market value), or c Chapter 5 of this Part (acquisition pursuant to securities option).

3 But the employer and the employee may elect that subsection (2) is not to apply to the employment-related securities.

4 An election under subsection (3)—

a is to be made by agreement by the employer and the employee, and b is irrevocable.

5 Such an agreement—

a must be made in a form approved by the Board of Inland Revenue, and b may not be made more than 14 days after the acquisition.