Commentary on Sections The Income Tax (Offices and Employments) Act 1944 (7&8 Geo. 6. (1943-44) c.12) Machinery of PAYE Section 698: PAYE: shares ceasing to be only conditional or being disposed of
2832.This section deals with employment income under section 427 (Charge on interest in shares ceasing to be only conditional or on disposal) – see paragraph 1853. It derives from parts of section 203FB of ICTA.
2833.Section 203FB of ICTA provides, in summary, that PAYE applies to share-related events where the shares are readily convertible assets. It deals with several such events. These are divided here between this section and sections 699 and 700 to make them easier to relate back to the way Chapters 2, 3 and 5 of Part 7 give rise to employment income in such cases. But these are complex events which involve some complex rules.
2834.Subsections (1) and (2) set out the circumstances in which this section applies.
2835.Subsection (3) provides that in those circumstances the event is treated as if a further interest in shares had been provided. PAYE may then apply – although that depends on for example whether or not it is a readily convertible asset.
2836.Subsection (4) provides that if section 696 requires PAYE to be operated in these circumstances the amount of the notional payment for PAYE purposes is the amount which is likely to be chargeable under Chapter 2 of Part 7.
2837.Subsection (5) applies to this section the meaning given by Chapter 2 of Part 7 to expressions such as “shares” (see section 434).