Finance (No. 2) Bill (HC Bill 190)
SCHEDULE 6 continued PART 2 continued
Contents page 170-179 180-189 190-198 200-209 210-219 220-229 230-244 245-259 259-260 260-269 270-279 280-289 290-299 300-309 310-319 320-329 330-339 340-349 350-359 360-369 370-379 Last page
Finance (No. 2) BillPage 270
(a) in paragraph (a)(i) for “an approved” substitute “a Schedule 3”, and
(b)
in paragraph (b) for “approved” substitute “a Schedule 3 SAYE
option scheme”.
(3) For sub-paragraph (3) substitute—
“(3)
5Sub-paragraph (3A) applies for the purposes of sub-paragraph
(1)(b) if—
(a)
the SAYE option scheme is not to be a Schedule 3 SAYE
option scheme by virtue of paragraph 40H or 40I of
Schedule 3 to ITEPA 2003, and
(b)
10the option was granted before, but exercised at or after, the
time mentioned in paragraph 40H(2)(a)(i) or (ii) or
40I(7)(a)(i) or (ii) of that Schedule (as the case may be).
(3A)
The scheme is to be taken still to be a Schedule 3 SAYE option
scheme when the option is exercised.”
15Other amendments: ITEPA 2003, Part 4 of FA 2004, ITTOIA 2005 and CTA 2009
129 ITEPA 2003 is amended as follows.
130 In section 227 (scope of Part 4) in subsection (4)(e) omit “approved”.
131
In section 417 (scope of Part 7) in subsection (2), in the entry for Chapter 7,
omit “approved”.
132
20In section 431A (provision relating to restricted securities) in subsection
(2)(b) for “an approved” substitute “a Schedule 3”.
133
In section 473 (introduction to taxation of securities options) in subsection
(4)(a) for “approved” substitute “Schedule 3”.
134
In section 476 (charge on occurrence of chargeable event) in subsection (6),
25in the entry for section 519, omit “approved”.
135
In section 549 (application of Chapter 11 of Part 7) in subsection (2)(b) omit
“approved”.
136 (1) Section 554E (exclusions under Part 7A) is amended as follows.
(2) In subsection (1)(b) for “an approved” substitute “a Schedule 3”.
(3)
30In subsection (3)(a)(ii) and (b)(ii) for the first “an approved” substitute “a
Schedule 3”.
(4)
In subsection (4)(a) and (b) for the second “approved” substitute “Schedule
3”.
137 In section 697 (PAYE: enhancing the value of an asset) in subsection (4)—
(a)
35in paragraph (a) omit the words from “Schedule 3” to the second
“or”,
(b) after paragraph (a) insert—
“(aa)
any shares acquired by the employee under a scheme
which is a Schedule 3 SAYE option scheme (see
40Schedule 3),”, and
(c)
in paragraph (b) for “such a scheme” substitute “a scheme mentioned
in any of the preceding paragraphs”.
Finance (No. 2) BillPage 271
138 In section 701 (PAYE: meaning of “asset”) in subsection (2)(c)—
(a)
in sub-paragraph (i) omit “Schedule 3 (approved SAYE option
schemes) or”, and
(b) after sub-paragraph (i) insert—
“( iza)
5any shares acquired by the employee under a
scheme which is a Schedule 3 SAYE option
scheme (see Schedule 3),”.
139
In section 195 of FA 2004 (pensions: transfer of certain shares to be treated as
payment of contribution) in subsection (5), in the definition of “SAYE option
10scheme”, omit “approved”.
140
(1)
Section 703 of ITTOIA 2005 (SAYE interest: meaning of “certified SAYE
savings arrangement”) is amended as follows.
(2) In subsection (2)(b) for “an approved” substitute “a Schedule 3”.
(3) In subsection (3) for the definition of “SAYE option scheme” substitute—
-
15““Schedule 3 SAYE option scheme” has the meaning given in
Schedule 3 to ITEPA 2003.”
141
(1)
Section 999 of CTA 2009 (deduction for costs of setting up SAYE option
scheme etc) is amended as follows.
(2) In subsection (1)—
(a)
20in paragraph (a) omit “that is approved by an officer of Revenue and
Customs”, and
(b) omit paragraph (b) and the “and” before it.
(3) In subsection (2)—
(a) at the beginning of paragraph (a) insert “Schedule 3”,
(b) 25at the beginning of paragraph (b) insert “Schedule 4”, and
(c) omit the final sentence.
(4)
In subsection (6) for “approval is given” (in all places) substitute “relevant
date falls”.
(5) After subsection (6) insert—
“(6A) 30In subsection (6) “the relevant date”—
(a)
in relation to a Schedule 3 SAYE option scheme, has the
meaning given in paragraph 40A(6) of Schedule 3 to ITEPA
2003, and
(b)
in relation to a Schedule 4 CSOP scheme, has the meaning
35given in paragraph 28A(6) of Schedule 4 to ITEPA 2003.”
Other amendments: Individual Savings Account Regulations 1998 (S.I. 1998/1870)
142 The Individual Savings Account Regulations 1998 are amended as follows.
143 In regulation 2 (interpretation) in paragraph (1)(a)—
(a) omit the definition of “approved SAYE option scheme”, and
(b) 40at the appropriate place insert—
-
““Schedule 3 SAYE option scheme” shall be construed in
accordance with the SAYE code (see section 516(3) of
ITEPA 2003);”.
Finance (No. 2) BillPage 272
144
In regulation 7 (qualifying investments) in paragraphs (2)(h)(i) and (10)(a)
for “an approved” substitute “a Schedule 3”.
Commencement and transitional provision
145 This Part is treated as having come into force on 6 April 2014.
146
5Paragraphs 147 to 156 below apply in relation to an SAYE option scheme
established before 6 April 2014.
147
(1)
If the scheme was an approved SAYE option scheme immediately before 6
April 2014, this paragraph applies to any provision which the scheme
contains immediately before that date and which requires the approval or
10agreement of Her Majesty’s Revenue and Customs or an officer of Revenue
and Customs to be obtained in relation to any matter.
(2)
On and after 6 April 2014, the provision is to have effect without the
requirement for the approval or agreement, unless the requirement reflects
a requirement for approval or agreement set out in Schedule 3 to ITEPA 2003
15(as amended by this Part).
148
(1)
If the scheme was an approved SAYE option scheme immediately before 6
April 2014, the amendment made by paragraph 108 above has effect in
relation to the scheme only if, and when, there is an alteration in a key
feature of the scheme on or after that date.
(2)
20In sub-paragraph (1) “key feature” has the meaning given in paragraph
40B(8) of Schedule 3 to ITEPA 2003 (as inserted by paragraph 117 above).
149
If the scheme was an approved SAYE option scheme immediately before 6
April 2014, on and after that date the scheme has effect with any
modifications needed to reflect the amendment made by paragraph 110
25above.
150
(1)
This paragraph applies if, immediately before 6 April 2014, the scheme was
an approved SAYE option scheme which contains provision authorised by
paragraph 28(3) of Schedule 3 to ITEPA 2003.
(2)
On and after 6 April 2014, the scheme has effect with any modifications
30needed to reflect the amendments made by paragraph 111 above.
151
(1)
The amendment made by paragraph 112 above has no effect in relation to
share options granted before 6 April 2014 under the scheme.
(2)
If the scheme was an approved SAYE option scheme immediately before 6
April 2014, on and after that date the scheme has effect with any
35modifications needed to reflect the amendment made by paragraph 112
above (subject to sub-paragraph (1) of this paragraph).
152
(1)
The amendments made by paragraph 113 above have no effect in a case
where P ceases to hold the scheme-related employment before 6 April 2014.
(2)
If immediately before 6 April 2014 the scheme was an approved SAYE
40option scheme which contains provision authorised by paragraph 34(5) of
Schedule 3 to ITEPA 2003, on and after that date the scheme has effect with
any modifications needed to reflect the amendments made by paragraph 113
above (subject to sub-paragraph (1) of this paragraph).
Finance (No. 2) BillPage 273
153
(1)
This paragraph applies if, immediately before 6 April 2014, the scheme was
an approved SAYE option scheme which contains provision authorised by
paragraph 37(1) of Schedule 3 to ITEPA 2003.
(2)
On and after 6 April 2014, the scheme has effect with any modifications
5needed to reflect the amendment made by paragraph 114(3) above.
154
(1)
Paragraph 40A of Schedule 3 to ITEPA 2003 (as inserted by paragraph 117
above) has effect in relation to the scheme—
(a)
as if, at the end of sub-paragraph (1), the words “on or before 6 July
2015” were inserted,
(b)
10if the first date on which share options are granted under the scheme
falls before 6 April 2014—
(i)
as if, in sub-paragraph (3)(b), the reference to that date were
a reference to 6 April 2014 and, accordingly, as if all
references in paragraph 40A to the first grant date were
15references to 6 April 2014,
(ii) as if sub-paragraph (3)(b)(i) were omitted, and
(iii) as if, in sub-paragraph (3)(b)(ii), “otherwise” were omitted,
(c) as if sub-paragraph (5) were omitted, and
(d)
as if, in sub-paragraph (6), the definitions of “the initial notification
20deadline” and “the relevant tax year” were omitted.
(2)
But the scheme cannot be a Schedule 3 SAYE option scheme if, before 6 April
2014, an application for its approval was refused or an officer of Revenue
and Customs decided to withdraw its approval.
(3)
Sub-paragraph (2) is without prejudice to the outcome of any appeal under
25paragraph 41 or 44 of Schedule 3 to ITEPA 2003 against the refusal or
decision to withdraw approval.
(4)
The amendments made by this Part do not affect any right of appeal under
paragraph 41 or 44 of Schedule 3 to ITEPA 2003 against a refusal or decision
made before 6 April 2014 in relation to the scheme.
(5)
30Sub-paragraphs (6) and (7) apply if a share option was granted before 6
April 2014 under the scheme at a time when the scheme was an approved
SAYE option scheme.
(6)
On and after 6 April 2014, the SAYE code has effect in relation to the option
as if it were granted under the scheme at a time when the scheme was a
35Schedule 3 SAYE option scheme (even if no notice is given under paragraph
40A of Schedule 3 to ITEPA 2003 in relation to the scheme or the scheme
cannot be a Schedule 3 SAYE option scheme because of sub-paragraph (2) of
this paragraph).
(7)
If no notice is given under paragraph 40A of Schedule 3 to ITEPA 2003 in
40relation to the scheme, paragraph 40B of that Schedule (as inserted by
paragraph 117 above) is to apply in relation to the scheme despite no notice
being given; and, for this purpose, the relevant date is to be taken to be 6
April 2014.
(8)
Sub-paragraph (9) applies in relation to a share option granted before 6 April
452014 under the scheme at a time when the scheme was an approved SAYE
option scheme if—
Finance (No. 2) BillPage 274
(a)
no notice is given under paragraph 40A of Schedule 3 to ITEPA 2003
in relation to the scheme or the scheme cannot be a Schedule 3 SAYE
option scheme because of sub-paragraph (2) of this paragraph, and
(b) the option is exercised on or after 6 April 2014.
(9)
5The scheme is to be taken to be a Schedule 3 SAYE option scheme at the time
of the exercise of the option for the purposes of the following provisions in
their application to the option—
(a)
section 519 of ITEPA 2003 (exemption in respect of exercise of share
option), and
(b)
10paragraph 10(1)(b) of Schedule 7D to TCGA 1992 (market value rule
not to apply).
(10) In relation to the scheme—
(a)
paragraph 40F of Schedule 3 to ITEPA 2003 (as inserted by
paragraph 117 above) has effect as if for sub-paragraph (2) there
15were substituted—
“(2)
HMRC may enquire into the scheme if HMRC give notice
to the scheme organiser of HMRC’s intention to do so no
later than 6 July 2016.”, and
(b)
the cases covered by paragraphs 40F(4)(b), 40H(1)(a)(ii) and
2040I(1)(a)(ii) of Schedule 3 to ITEPA 2003 (as inserted by paragraph
117 above) include cases in which requirements of Parts 2 to 7 of that
Schedule were not met before 6 April 2014.
155
If the scheme was an approved SAYE option scheme before 6 April 2014, the
amendments made by this Part do not affect the deductions which may be
25made in relation to the scheme under section 999 of CTA 2009 (deduction for
costs of setting up scheme) if they would otherwise do so.
156
The amendments made by paragraph 118 above do not affect a notice given
in relation to the scheme under paragraph 45 of Schedule 3 to ITEPA 2003
before 6 April 2014.
30Part 3 CSOP schemes
Amendments to Chapter 8 of Part 7 of ITEPA 2003
157
Chapter 8 of Part 7 of ITEPA 2003 (employment income: income and
exemptions relating to securities: CSOP schemes) is amended as follows.
158 35In the title omit “Approved”.
159 (1) Section 521 (introduction to CSOP schemes) is amended as follows.
(2) In the heading omit “Approved”.
(3) In subsection (1)—
(a) omit paragraph (a), and
(b)
40in paragraph (b) for “those” substitute “CSOP schemes which are
Schedule 4 CSOP”.
(4) Omit subsection (2).
(5) In subsection (3)(c) for “approved” substitute “Schedule 4”.
Finance (No. 2) BillPage 275
(6) In subsection (4)—
(a) omit the definition of “approved”, and
(b) after the definition of “CSOP scheme” insert—
-
““Schedule 4” CSOP scheme is to be read in accordance
5with paragraph 1 and Part 7 of Schedule 4;”.
160
In section 522 (share options to which Chapter applies) in subsection (1)(a)
for “an approved” substitute “a Schedule 4”.
161
(1)
Section 524 (no charge in respect of exercise of option) is amended as
follows.
(2) 10In subsection (1)(a) for “approved” substitute “a Schedule 4 CSOP scheme”.
(3) In subsection (2E)—
(a)
in paragraph (a) for “approved” substitute “a Schedule 4 CSOP
scheme”,
(b)
in paragraphs (c), (d) and (f) after sub-paragraph (ii) omit “or” and
15insert—
“( iia)
the non-UK company reorganisation
arrangement, or”, and
(c) in paragraph (e) after sub-paragraph (ii) omit “or” and insert—
“( iia)
the making of any non-UK company
20reorganisation arrangement which would fall
within subsection (2L), or”.
(4) In subsection (2L)—
(a)
after “arrangement” insert “or a non-UK company reorganisation
arrangement”, and
(b) 25in paragraph (b) for “an approved” substitute “a Schedule 4”.
162 Schedule 4 is amended as follows.
163 In the title omit “Approved”.
164
In the cross-heading before paragraph 1 for “Approval of” substitute
“Introduction to Schedule 4”.
165 (1) 30Paragraph 1 (introduction) is amended as follows.
(2) For sub-paragraphs (1) and (2) substitute—
“(A1)
For the purposes of the CSOP code a CSOP scheme is a Schedule
4 CSOP scheme if the requirements of Parts 2 to 6 of this Schedule
are met in relation to the scheme.”
(3) 35For sub-paragraph (4) substitute—
“(4) Sub-paragraph (A1) is subject to Part 7 of this Schedule which—
(a)
requires notice of a scheme to be given to Her Majesty’s
Revenue and Customs (“HMRC”) in order for the scheme
to be a Schedule 4 CSOP scheme (see paragraph 28A(1)),
(b)
40provides for a scheme in relation to which such notice is
given to be a Schedule 4 CSOP scheme (see paragraph
28A(4)), and
Finance (No. 2) BillPage 276
(c)
gives power to HMRC to enquire into a scheme and to
decide that the scheme should not be a Schedule 4 CSOP
scheme (see paragraphs 28F to 28I).”
166 In the title for Part 2 omit “for approval”.
167 5In the cross-heading before paragraph 4 omit “for approval”.
168 For paragraph 5 (general restriction on contents of scheme) substitute—
“5
(1)
The purpose of the scheme must be to provide, in accordance with
this Schedule, benefits for employees and directors in the form of
share options.
(2)
10The scheme must not provide benefits to employees or directors
otherwise than in accordance with this Schedule.
(3)
For example, the scheme must not provide cash as an alternative
to share options or shares which might otherwise be acquired by
the exercise of share options.”
169
15In paragraph 6 (limit on value of shares subject to options) in sub-paragraph
(1)(b) for “approved” substitute “Schedule 4”.
170
In paragraph 15 (requirements relating to shares that may be subject to share
options) after sub-paragraph (1) insert—
“(1A)
Sub-paragraph (1) and the other paragraphs of this Part are subject
20to paragraph 25A(7B).”
171
In paragraph 21 (requirements relating to share options) in sub-paragraph
(1) before the entry for paragraph 22 insert—
“paragraph 21A (general requirements as to terms of
option),”.
172 25After paragraph 21 insert—
“General requirements as to terms of option
21A
(1)
The following terms of a share option which is granted under the
scheme must be stated at the time the option is granted—
(a)
the price at which shares may be acquired by the exercise
30of the option,
(b)
the number and description of the shares which may be
acquired by the exercise of the option,
(c) the restrictions to which those shares may be subject,
(d)
the times at which the option may be exercised (in whole
35or in part), and
(e)
the circumstances under which the option will lapse or be
cancelled (in whole or in part), including any conditions to
which the exercise of the option is subject (in whole or in
part).
(2)
40Terms stated as required by sub-paragraph (1) may be varied after
the grant of the option, but—
(a)
in the case of the price, only as provided for in paragraph
22,
Finance (No. 2) BillPage 277
(b)
in the case of the number or description of shares, only as
provided for in paragraph 22 or by way of a mechanism
which is stated at the time the option is granted, and
(c)
in any other case, only by way of a mechanism which is
5stated at the time the option is granted.
(3)
Any mechanism stated for the purposes of sub-paragraph (2)(b) or
(c) must be applied in a way that is fair and reasonable.
(4)
Terms stated as required by sub-paragraph (1), and any
mechanism stated for the purposes of sub-paragraph (2)(b) or (c),
10must be notified to the participant as soon as practicable after the
grant of the option.”
173
(1)
Paragraph 22 (requirements as to price for acquisition of shares etc) is
amended as follows.
(2) In sub-paragraph (1)—
(a) 15omit paragraph (a) and the “and” after it, and
(b)
in paragraph (b) for “that time” substitute “the time when the option
is granted”.
(3) After sub-paragraph (3) insert—
“(3A)
If the scheme makes provision under sub-paragraph (3), the
20variation or variations made under that provision to take account
of a variation in any share capital must (in particular) secure—
(a)
that the total market value of the shares which may be
acquired by the exercise of the share option is immediately
after the variation or variations substantially the same as
25what it was immediately before the variation or variations,
and
(b)
that the total price at which those shares may be acquired
is immediately after the variation or variations
substantially the same as what it was immediately before
30the variation or variations.
(3B)
Sub-paragraph (3) does not authorise any variation which would
result in the requirements of the other paragraphs of this Schedule
not being met in relation to the share option.”
(4) Omit sub-paragraph (4).
(5) 35Omit sub-paragraph (5).
174 (1) Paragraph 25 (exercise of options: death) is amended as follows.
(2) Make the existing text sub-paragraph (1).
(3)
In the new sub-paragraph (1) omit “but not later than 12 months after that
date”.
(4) 40After the new sub-paragraph (1) insert—
“(2)
Provision made under sub-paragraph (1) must permit the exercise
of the options at any time on or after the date of death but not later
than 12 months after that date.”
175 (1) Paragraph 25A (exercise of options: company events) is amended as follows.
Finance (No. 2) BillPage 278
(2) In sub-paragraph (1) for “or (6)” substitute “, (6) or (6A)”.
(3) In sub-paragraph (6)(b) for “an approved” substitute “a Schedule 4”.
(4) After sub-paragraph (6) insert—
“(6A)
The relevant date for the purposes of this sub-paragraph is the
5date on which a non-UK company reorganisation arrangement
applicable to or affecting—
(a)
all the ordinary share capital of the company or all the
shares of the same class as the shares to which the option
relates, or
(b)
10all the shares, or all the shares of that same class, which are
held by a class of shareholders identified otherwise than
by reference to their employments or directorships or their
participation in a Schedule 4 CSOP scheme,
becomes binding on the shareholders covered by it.”
(5) 15After sub-paragraph (7) insert—
“(7A)
Sub-paragraphs (7B) to (7F) apply if the scheme makes provision
under sub-paragraph (1) or (7).
(7B)
The scheme may provide that if, in consequence of a relevant
event, shares in the company to which a share option relates no
20longer meet the requirements of Part 4 of this Schedule, the share
option may be exercised under the provision made under sub-
paragraph (1) or (7) (as the case may be) no later than 20 days after
the day on which the relevant event occurs, notwithstanding that
the shares no longer meet the requirements of Part 4 of this
25Schedule.
(7C) In sub-paragraph (7B) “relevant event” means—
(a)
a person obtaining control of the company as mentioned in
sub-paragraph (2)(a);
(b)
a person obtaining control of the company as a result of a
30compromise or arrangement sanctioned by the court as
mentioned in sub-paragraph (6);
(c)
a person obtaining control of the company as a result of a
non-UK company reorganisation arrangement which has
become binding on the shareholders covered by it as
35mentioned in sub-paragraph (6A);
(d)
a person who is bound or entitled to acquire shares in the
company as mentioned in sub-paragraph (7) obtaining
control of the company.
(7D)
Provision made under sub-paragraph (7B) may not authorise the
40exercise of a share option, as the case may be—
(a)
at a time outside the 6 month period mentioned in sub-
paragraph (1), or
(b) at a time not covered by sub-paragraph (7).
(7E)
The scheme may provide that a share option relating to shares in
45a company which is exercised during the period of 20 days ending
with—
Finance (No. 2) BillPage 279
(a)
the relevant date for the purposes of sub-paragraph (2), (6)
or (6A), or
(b)
the date on which any person becomes bound or entitled
to acquire shares in the company as mentioned in sub-
5paragraph (7),
is to be treated as if it had been exercised in accordance with the
provision made under sub-paragraph (1) or (7) (as the case may
be).
(7F)
If the scheme makes provision under sub-paragraph (7E) it must
10also provide that if—
(a)
a share option is exercised in reliance on that provision in
anticipation of—
(i)
an event mentioned in sub-paragraph (2), (6) or
(6A) occurring, or
(ii)
15a person becoming bound or entitled to acquire
shares in the company as mentioned in sub-
paragraph (7), but
(b) as the case may be—
(i)
the relevant date for the purposes of sub-paragraph
20(2), (6) or (6A) does not fall during the period of 20
days beginning with the date on which the share
option is exercised, or
(ii)
the person does not become bound or entitled to
acquire shares in the company by the end of the
25period of 20 days beginning with the date on which
the share option is exercised,
the exercise of the share option is to be treated as having had no
effect.”
176
(1)
Paragraph 26 (exchanges of options on company reorganisation) is amended
30as follows.
(2) In sub-paragraph (2) after paragraph (b) insert—
“(ba)
obtains control of the scheme company as a result of a non-
UK company reorganisation arrangement which has
become binding on the shareholders covered by it; or”.
(3) 35In sub-paragraph (3) after paragraph (b) omit “and” and insert—
“(ba)
where control is obtained in the way set out in sub-
paragraph (2)(ba), within the period of 6 months
beginning with the date on which the non-UK company
reorganisation arrangement becomes binding on the
40shareholders covered by it, and”.
177
(1)
Paragraph 27 (requirements about share options granted in exchange) is
amended as follows.
(2) In sub-paragraph (4)—
(a)
in paragraph (c) for “equal” substitute “be substantially the same as”,
45and
(b) in paragraph (d) for “equal to” substitute “substantially the same as”.