Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 199: Disposal for more than market value: amount treated as earnings
787.This section sets out the circumstances in which a benefit arises and how it is to be chargeable to tax. It derives from parts of section 162(6), (7), (8), and (9) of ICTA.
788.Subsection (1) applies the provisions of the section in the case of a disposal of the employment-related shares. The words in section 162(6)(a) of ICTA “by surrender or otherwise” have not been used as they are unnecessary.
789.Subsection (2) derives from section 162(8) of ICTA. It prevents chargeability when the disposal takes place after the death of the employee. In rewriting this the words “whether by his personal representatives or otherwise” have been left out. These words do not add anything and are unnecessary.
790.Subsection (3) provides a formula to arrive at the amount to be treated as earnings. If any part of that amount is earnings by virtue of section 62 of this Act any possible double charge is prevented by section 64(1) and (2) of this Act.
791.Subsection (4) derives partly from section 162(7) of ICTA. The references to the employment becoming excluded employment are new. Note 24 in Annex 2 explains why they are necessary.
792.Subsection (5) explains how to arrive at the market value of an interest in shares.