CG56342 - Shares and securities: employee share schemes: employment-related securities: convertible securities
prevents the market value rule applying to the acquisition of convertible employment-related securities (s±ð±ð CG56321). The acquisition cost for capital gains purposes is instead built up from the actual cost and amounts chargeable to Income Tax.
 provides that for the purposes of any liability to Income Tax in respect of earnings under the market value of convertible employment-related securities is normally to be determined as if they were not convertible. Thus, if the employee's acquisition cost for capital gains purposes were to be market value, there could be a mismatch (s±ð±ð CG56337).
The capital gains acquisition cost of convertible employment-related securities acquired on or after 1 September 2003 is, by
their actual cost at the date of acquisition together with
any amount which constituted earnings in respect of their acquisition under (for disposals after 11 March 2008 exempt income is ignored. For disposals after 5 April 2015 earnings which were not charged to UK tax, but which would have been exempt if they had been, are also ignored) and
amounts counting as income under on a conversion under . See ²¹²Ô»å CG56328.
In the case of shares which on acquisition became employee shareholder shares (s±ð±ð CG56705P) the consideration for the acquisition is (subject to the operation of ) equal to the amount that constituted earnings under or and no other consideration is treated as having been given for the acquisition of the shares.