Finance (No. 2) Bill

Session 2012 - 13
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Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 1 — Annual investment allowance: periods straddling 1 January 2013 or 1 January 2015
137

Schedules
Schedule 1
Section 7

Annual investment allowance: periods straddling 1 January 2013 or 1 January
2015
Chargeable periods which straddle 1 January 2013
5
1     (1)
This paragraph applies in relation to a chargeable period which begins
before 1 January 2013 and ends on or after that date (“the first straddling
period”).
      (2)
The maximum allowance under section 51A of CAA 2001 for the first
straddling period is the sum of each maximum allowance that would be
10
found if—
(a)
so much (if any) of the first straddling period as falls before the
relevant date,
(b)
so much of the first straddling period as falls on or after the relevant
date but before 1 January 2013, and
15
(c)
so much of the first straddling period as falls on or after 1 January
2013,

were each treated as separate chargeable periods.
      (3)
But this is subject to paragraphs 2 and 3.
      (4)
In this Schedule “the relevant date” means—
20
(a)
for the purposes of corporation tax, 1 April 2012;
(b)
for the purposes of income tax, 6 April 2012.
Straddling period beginning before the relevant date
2     (1)
This paragraph applies where the first straddling period begins before the
relevant date.
25
      (2)
So far as concerns expenditure incurred before the relevant date, the
maximum allowance under section 51A of CAA 2001 for the first straddling
period is what would have been the maximum allowance for that period if
the amendment made by section 7(1) had not been made.
      (3)
So far as concerns expenditure incurred on or after the relevant date but
30
before 1 January 2013, the maximum allowance under section 51A of CAA
2001 for the first straddling period is—
      (4)
In sub-paragraph (3)—

Finance (No. 2) Bill
Schedule 1 — Annual investment allowance: periods straddling 1 January 2013 or 1 January 2015
138

(a)
“A” means the amount that would have been the maximum
allowance for the period beginning on the relevant date and ending
at the end of the first straddling period if—
(i)
that period had been a separate chargeable period, and
(ii)
the amendment made by section 7(1) had not been made;
5
(b)
“B” means the amount (if any) by which—
(i)
the AIA expenditure incurred in the period mentioned in
paragraph 1(2)(a) in respect of which a claim for an annual
investment allowance is made, exceeds
(ii)
the maximum allowance under section 51A of CAA 2001 for
10
that period if it were treated as a separate chargeable period.
      (5)
So far as concerns expenditure incurred on or after 1 January 2013, the
maximum allowance under section 51A of CAA 2001 for the first straddling
period is the sum of each maximum allowance that would be found if the
period mentioned in paragraph 1(2)(b) and the period mentioned in
15
paragraph 1(2)(c) were each treated as separate chargeable periods.
First straddling period beginning on or after the relevant date
3     (1)
This paragraph applies where no part of the first straddling period falls
within paragraph 1(2)(a).
      (2)
So far as concerns expenditure incurred before 1 January 2013, the maximum
20
allowance under section 51A of CAA 2001 for the first straddling period is
to be calculated as if the amendment made by section 7(1) had not been
made.
Chargeable periods which straddle 1 January 2015
4     (1)
This paragraph applies in relation to a chargeable period (“the second
25
straddling period”) which begins before 1 January 2015 and ends on or after
that date.
      (2)
The maximum allowance under section 51A of CAA 2001 for the second
straddling period is the sum of each maximum allowance that would be
found if—
30
(a)
the period beginning with the first day of the chargeable period and
ending with the day before 1 January 2015, and
(b)
the period beginning with 1 January 2015 and ending with the last
day of the chargeable period,

were treated as separate chargeable periods.
35
      (3)
But, so far as concerns expenditure incurred on or after 1 January 2015, the
maximum allowance under section 51A of CAA 2001 for the second
straddling period is the maximum allowance, calculated in accordance with
sub-paragraph (2), for the period mentioned in paragraph (b) of that sub-
paragraph.
40
Operation of annual investment allowance where restrictions apply
5     (1)
Paragraphs 1 to 4 also apply for the purpose of determining the maximum
allowance under section 51K of CAA 2001 (operation of annual investment
allowance where restrictions apply) in a case where one or more chargeable

Finance (No. 2) Bill
Schedule 2 — Tax advantaged employee share schemes
Part 1 — Retirement of participants
139

periods in which the relevant AIA qualifying expenditure is incurred are
chargeable periods within paragraph 1(1) or 4(1).

This is subject to sub-paragraphs (2) and (3).
      (2)
There is to be taken into account for those purposes only chargeable periods
of one year or less (whether or not they are chargeable periods within
5
paragraph 1(1) or 4(1)), and, if there is more than one such period, only that
period which gives rise to the greatest maximum allowance.
      (3)
For the purposes of sub-paragraph (2) any chargeable period which—
(a)
is longer than a year, and
(b)
ends in the tax year 2012-13, 2013-14, 2014-15, 2015-16 or 2016-17,
10

is to be treated as being a chargeable period of one year ending at the same
time as it actually ends.
      (4)
Section 11(11) of FA 2011 is repealed.
      (5)
That repeal has effect in relation to cases where one or more chargeable
periods in which the relevant AIA qualifying expenditure is incurred are
15
chargeable periods within paragraph 1(1).
      (6)
Nothing in this paragraph affects the operation of sections 51M and 51N of
CAA 2001.
Schedule 2
Section 14

Tax advantaged employee share schemes
20
Part 1
Retirement of participants
Introduction
1
Part 7 of ITEPA 2003 (employment income: income and exemptions relating
to securities) is amended as follows.
25
Share incentive plans
2
In section 498 (no charge on shares ceasing to be subject to plan in certain
circumstances) in subsection (2)(e) omit the words from “on” to “2)”.
3
In Part 4 of Schedule 2 (types of shares that may be awarded) in paragraph
32 (provision for forfeiture) in sub-paragraph (2)(e) omit the words from
30
“on” to “98)”.
4
Part 11 of Schedule 2 (supplementary provisions) is amended as follows.
5
Omit paragraph 98 (meaning of “specified retirement age”).
6
In paragraph 100 (index of defined expressions) omit the entry for “the
specified retirement age”.
35

Finance (No. 2) Bill
Schedule 2 — Tax advantaged employee share schemes
Part 1 — Retirement of participants
140

SAYE option schemes
7
Part 6 of Schedule 3 (requirements etc relating to share options) is amended
as follows.
8
In paragraph 27 (introduction) in sub-paragraph (1)—
(a)
omit the entry for paragraph 31,
5
(b)
after the entry for paragraph 32 insert “and”, and
(c)
omit the entry for paragraph 33 and the “and” after it.
9
In paragraph 30 (time for exercising options) in sub-paragraph (2)(a)—
(a)
for “32 to” substitute “32,”, and
(b)
omit “reaching the specified age without retiring,”.
10
10
Omit paragraph 31 (requirement to have a “specified age”).
11
Omit paragraph 33 (exercise of options: reaching specified age without
retiring).
12
In paragraph 34 (exercise of options: scheme-related employment ends) in
sub-paragraph (2)(b) omit the words from “on” to “employment”.
15
13
In Part 9 of Schedule 3 (supplementary provisions) in paragraph 49 (index
of defined expressions) omit the entry for “specified age”.
CSOP schemes
14
In section 524 (no charge in respect of exercise of option) in subsection (2C)
omit the definition of “retirement” and the “and” before it.
20
15
In Part 8 of Schedule 4 (supplementary provisions) omit paragraph 35A
(retirement age).
Transitional provision
16
The amendment made by paragraph 11 above has no effect in relation to
options granted before the day on which this Act is passed; and the effect of
25
the amendments made by paragraphs 8 to 10 and 13 above is limited
accordingly.
17    (1)
A SIP, SAYE option scheme or CSOP scheme approved before the day on
which this Act is passed has effect with any modifications needed to reflect
the amendments made by this Part of this Schedule.
30
      (2)
In relation to any shares awarded under a SIP before that day which are
subject to provision for forfeiture, that provision has effect with any
modifications needed to reflect the amendment made by paragraph 3 above.
      (3)
Because of paragraphs 47 and 57 below, that amendment is not relevant to
shares awarded under a SIP on or after that day.
35

Finance (No. 2) Bill
Schedule 2 — Tax advantaged employee share schemes
Part 2 — “Good leavers” (other than retirees)
141

Part 2
“Good leavers” (other than retirees)
Introduction
18
Part 7 of ITEPA 2003 (employment income: income and exemptions relating
to securities) is amended as follows.
5
Share incentive plans
19
In section 498 (no charge on shares ceasing to be subject to plan in certain
circumstances) after subsection (2) insert—
“(3)
A participant is not liable to income tax on shares (“the relevant
shares”) in a company (“the relevant company”) being withdrawn
10
from the plan if—
(a)
the withdrawal of the relevant shares from the plan relates
to—
(i)
a transaction resulting from a compromise,
arrangement or scheme falling within subsection (9),
15
(ii)
an offer forming part of a general offer falling within
subsection (10), or
(iii)
the application of sections 979 to 982 or 983 to 985 of
the Companies Act 2006 in the case of a takeover offer
(as defined in section 974 of that Act) falling within
20
subsection (12), and
(b)
as a result of, as the case may be—
(i)
the transaction,
(ii)
the offer, or
(iii)
the application of sections 979 to 982 or 983 to 985 of
25
the Companies Act 2006,

the participant receives cash (and no other assets) in
exchange for the relevant shares.
(4)
For the purposes of subsection (3)(b) it does not matter if the
participant receives other assets in exchange for shares other than the
30
relevant shares.
(5)
Subsection (3) does not apply to the relevant shares (or to a
proportion of them) if in connection with, as the case may be—
(a)
the compromise, arrangement or scheme,
(b)
the general offer, or
35
(c)
the takeover offer,

a course of action was open to the participant which, had it been
followed, would have resulted in other assets being received in
exchange for the relevant shares (or the proportion of them) instead
of cash.
40
(6)
Subsection (3) does not apply to the relevant shares (or to a
proportion of them) if it is reasonable to suppose that the relevant
shares (or the proportion of them) would not have been awarded to
the participant—
(a)
had, as the case may be—
45

Finance (No. 2) Bill
Schedule 2 — Tax advantaged employee share schemes
Part 2 — “Good leavers” (other than retirees)
142

(i)
the compromise, scheme or arrangement,
(ii)
the general offer, or
(iii)
the takeover offer,

not been made, or
(b)
had any arrangements for the making of—
5
(i)
a compromise, arrangement or scheme which would
fall within subsection (9),
(ii)
a general offer which would fall within subsection
(10), or
(iii)
a takeover offer (as defined in section 974 of the
10
Companies Act 2006) which would fall within
subsection (12),

which were in place or under consideration at any time not
been in place or under consideration.
(7)
In subsection (6) the reference to shares being awarded to the
15
participant is to be read, in the case of dividend shares, as a reference
to the shares being acquired by the trustees on the participant’s
behalf.
(8)
In subsection (6)(b) “arrangements” includes any plan, scheme,
agreement or understanding, whether or not legally enforceable.
20
(9)
A compromise, arrangement or scheme falls within this subsection if
it is applicable to or affects—
(a)
all the ordinary share capital of the relevant company or all
the shares of the same class as the relevant shares, or
(b)
all the shares, or all the shares of that same class, which are
25
held by a class of shareholders identified otherwise than by
reference to their employment or their participation in an
approved SIP.
(10)
A general offer falls within this subsection if—
(a)
it is made to holders of shares of the same class as the relevant
30
shares or to holders of shares in the relevant company, and
(b)
it is made in the first instance on a condition such that if it is
satisfied the person making the offer will have control of the
relevant company.
(11)
In subsection (10)(b) “control” has the meaning given by sections 450
35
and 451 of CTA 2010.
(12)
A takeover offer falls within this subsection if—
(a)
it relates to the relevant company, and
(b)
where there is more than one class of share in the relevant
company, the class or classes to which it relates is or include
40
the class of the relevant shares.”
20    (1)
In Part 5 of Schedule 2 (free shares) in paragraph 37 (holding period: power
of participant to direct trustees to accept general offers etc) after sub-
paragraph (6) insert—
    “(7)
If in the case of a takeover offer (as defined in section 974 of the
45
Companies Act 2006) there arises a right under section 983 of that
Act to require the offeror to acquire the participant’s free shares,

Finance (No. 2) Bill
Schedule 2 — Tax advantaged employee share schemes
Part 2 — “Good leavers” (other than retirees)
143

or such of them as are of a particular class, the participant may
direct the trustees to exercise that right.”
      (2)
A SIP approved before the day on which this Act is passed has effect with
any modifications needed to reflect the amendment made by this paragraph.
SAYE option schemes
5
21
In section 519 (no charge in respect of exercise of option) after subsection (3)
insert—
“(3A)
In relation to any shares acquired by the exercise of the share option,
no liability to income tax arises in respect of its exercise if—
(a)
the individual exercises the option before the third
10
anniversary of the date on which the option was granted at a
time when the SAYE option scheme is approved,
(b)
the option is exercised by virtue of a provision included in the
scheme—
(i)
under paragraph 37(1) of Schedule 3 where the
15
relevant date is the relevant date for the purposes of
paragraph 37(2) or (4), or
(ii)
under paragraph 37(6) of Schedule 3,
(c)
as a result of, as the case may be—
(i)
the general offer,
20
(ii)
the compromise or arrangement, or
(iii)
the takeover offer,

the individual receives cash (and no other assets) in exchange
for the shares,
(d)
when the decision to grant the option was taken—
25
(i)
the general offer,
(ii)
the compromise or arrangement, or
(iii)
the takeover offer,

as the case may be, had not been made,
(e)
when that decision was taken, no arrangements were in place
30
or under consideration for—
(i)
the making of a general offer which would fall within
subsection (3D),
(ii)
the making of any compromise or arrangement which
would fall within subsection (3F), or
35
(iii)
the making of a takeover offer (as defined in section
974 of the Companies Act 2006) which would fall
within subsection (3G),
(f)
if the scheme includes a provision under paragraph 38 of
Schedule 3 (“the paragraph 38 provision”), in connection
40
with—
(i)
the general offer,
(ii)
the compromise or arrangement, or
(iii)
the takeover offer,

as the case may be, no course of action was open to the
45
individual which, had it been followed, would have resulted
in the individual making an agreement under the paragraph