Section 119A — Taxation of Chargeable Gains Act 1992: Increase in expenditure by reference to tax charged in relation to employment-related securities

Increase in expenditure by reference to tax charged in relation to employment-related securities 119A 1 This section applies to a disposal of an asset consisting of employment-related securities if the disposal—

a is an event giving rise to a relevant income tax charge, or b is the first disposal after an event, other than a disposal, giving rise to a relevant income tax charge.

2 Section 38(1)(a) applies as if the relevant amount had formed part of the consideration given by the person making the disposal for his acquisition of the employment-related securities.

3 For the purposes of this section an event gives rise to a relevant income tax charge if it results in an amount counting as employment income in respect of the employment-related securities —

a under section 426 of ITEPA 2003 (restricted securities),

b under section 438 of ITEPA 2003 by virtue of section 439(3)(a) of that Act (conversion of convertible securities),

c under section 446U of ITEPA 2003 (securities acquired for less than market value: discharge of notional loan),

ca under section 447 of ITEPA 2003 (receipt of benefit) in a case where the benefit is an increase in the market value of the employment-related securities, d under section 476 of ITEPA 2003 by virtue of section 477(3)(a) of that Act (acquisition of securities pursuant to employment-related securities option), or—

e under subsection (3) of section 21 of the Finance Act 2005 (transitional charge in relation to shares in spin-out companies) by virtue of subsection (4)(b) of that section (election by employee). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 For the purposes of this section “ the relevant amount ” is the aggregate of the amounts counting as employment income as mentioned in subsection (3) above by reason of events occurring—

a not later than the disposal, and b where this section has applied to an earlier disposal of the employment-related securities, after the last disposal to which this section applied.

5 In determining for the purposes of subsection (4) the amount counting as employment income—

a in the case of an amount counting as employment income under section 476 of ITEPA 2003 any amounts deducted under section 480(5)(a) , (b) or (d) of that Act shall be added back, and b no account shall be taken of any relief under section 428A, 442A, 481 or 482 of that Act (relief for secondary Class 1 contributions or special contribution met by employee). 5A See also section 119B ( unchargeable, and unremitted chargeable, foreign securities income ) and section 119C (unremitted Part 7A income) .

6 Where securities or interests in securities cease to be employment-related securities—

a by reason of subsection (6) of section 421B of ITEPA 2003 in circumstances in which, immediately before the employee’s death, the employment-related securities are held otherwise than by the employee, or b by reason of subsection (7) of that section, they are to be regarded for the purposes of this section as remaining employment-related securities until the next occasion on which they are disposed of.

7 In this section— “ employment-related securities ”, and “ employee ”, in relation to employment-related securities, have the same meaning as in Chapters 1 to 4 of Part 7 of ITEPA 2003. 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .