ERSM40070 - Convertible securities: how to calculate the taxable amount

The taxable amount is, per ITEPA03/S440,

AG-CE

where:

AG is the amount of any gain arising from a chargeable event (see ERSM40080), and

CE is:

• the amount of any consideration given by the employee (or associated person) for the entitlement to convert, plus
• the amount of any expenses incurred by the holder of the securities in connection with each chargeable event

Consideration given includes the excess of consideration given to acquire the original securities over the market value of the securities when they were acquired, determined as if they were not convertible. (ITEPA03/S442)