Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 193: Notional loan where acquisition for less than market value
756.This section is derived from parts of section 162(1), (2) and (9) of ICTA and contains new drafting material.
757.Subsection (1) outlines the circumstances in which a benefit arises. It also provides that payments made before the acquisition will be allowable. This is a minor change to the law. See Change 36 in Annex 1.
758.Subsection (1)(a) applies the section to employment-related shares for which no payment is made.
759.Subsection (1)(b) covers the situation in which some payment is made. The subsection prevents shares which are not fully paid at the time of issue (but which later become fully paid) from being valued as part-paid shares.
760.Subsection (3) provides that the benefit is treated, under Chapter 7 of Part 3, as an employment-related loan on which no interest is payable.
761.Subsection (4) lists the provisions in Chapter 7 of Part 3 which apply to the notional loan. This is a minor change to the law. See Change 37 in Annex 1.
762.The provisions listed include section 175 of this Act, which specifies the tax year for which the cash equivalent is treated as earnings. See Note 7 in Annex 2.
763.Subsection (5) lists the provisions of the Act which may exempt a person from liability to tax under this section.