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(4) In subsection (3)(a) the appropriate amount of the old securities is—


where—

  • OS is the total number of the old securities,

  • 5OC is the value of such of the consideration as does not
    consist of the new securities, and

  • TC is value of the consideration determined in accordance
    with subsection (2).

(5) If the consideration consists wholly of the new securities—

(a) 10neither the disposal of the old securities, nor the acquisition
of the new securities, gives rise to any liability to income tax,

(b) the disposal is not a chargeable event within section 427(3)(c),
and

(c) this Chapter applies to the new securities as it applies to the
15old securities, subject to subsections (6) to (17).

(6) Sections 425 and 431 do not apply in relation to the new securities.

(7) If, at the time of the disposal, sections 426 to 429 do not apply to the
old securities by virtue of—

(a) an election made under section 430(1) or 431(1) in relation to
20the old securities, or

(b) this subsection,

sections 426 to 430 do not apply to the new securities.

(8) If there is a chargeable event for the purposes of section 426 in
relation to any of the new securities, for the purposes of section 428
25(amount of charge)—

(a) IUP (see subsection (3) of that section) is to be determined in
accordance with subsection (9), and

(b) PCP (see subsection (4) of that section) is to be determined in
accordance with subsection (10).

(9) 30IUP is equal to what IUP was, for the purposes of determining the
taxable amount for the purposes of section 426, in relation to
chargeable events relating to the old securities that occurred before
the disposal (or what it would have been had there been any such
chargeable events).

(10) 35PCP is the aggregate of—

(a) PCP determined in accordance with section 428(4), and

(b) what PCP would have been, for the purposes of determining
the taxable amount for the purposes of section 426, if a
chargeable event relating to the old securities had occurred
40immediately before the disposal but after any chargeable
events relating to the old securities that actually did occur
before the disposal.

(11) Subsections (12) to (14) apply if—

(a) section 425(2) (no liability to income tax on acquisition of
45certain securities subject to forfeiture etc) applied in relation
to the old securities, and

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(b) at the time of the disposal, there is still a restriction relating to
those securities such that they are restricted securities by
virtue of section 423(2) (provision for forfeiture etc).

(12) This Chapter has effect in relation to any of the new securities that
5are not restricted securities by virtue of section 423(2) as if—

(a) there were a restriction relating to them (“the deemed
restriction”) corresponding to the restriction relating to the
old securities mentioned in subsection (11)(b), and

(b) immediately after their acquisition, the deemed restriction
10were removed.

(13) Subsection (14) applies if—

(a) there is a restriction by virtue of which some or all of the new
securities are, at the time of the disposal, restricted securities,
by virtue of subsection (2) of section 423, and

(b) 15within 5 years after the acquisition of the old securities, the
restriction is not removed or varied such that the new
securities to which it relates cease to be restricted securities
by virtue of that subsection.

(14) For the purposes of this Chapter the restriction mentioned in
20subsection (13) is to be treated as being removed 5 years after the
acquisition of the old securities.

(15) Subsection (16) applies if, at the time of the disposal—

(a) there is a restriction relating to the old securities such that
they are restricted securities by virtue of section 423(2), and

(b) 25subsections (13) and (14) apply in relation to the old securities
(including by virtue of subsection (16)).

(16) Subsections (12) to (14) apply in relation to the new securities, but—

(a) the reference in subsection (12)(a) to the restriction
mentioned in subsection (11)(b) is to be read as a reference to
30the restriction mentioned in subsection (15)(a), and

(b) the references in subsections (13)(b) and (14) to the
acquisition of the old securities are to be read as references to
the acquisition of the original forfeitable securities.

(17) In subsection (16) “original forfeitable securities” means the
35restricted securities by virtue of the application to which of section
425(2) subsections (13) and (14) apply to the old securities.

(18) In this section references to restricted securities include a restricted
interest in securities.

33 (1) In Chapter 3C of Part 7 (securities acquired for less than market value),
40section 446U (discharge of notional loan) is amended as follows.

(2) In subsection (1), omit the “or” at the end of paragraph (a) and for paragraph
(b) substitute—

(b) if there is an outstanding or contingent liability to pay for the
employment-related securities, that liability is released,
45extinguished, transferred or adjusted so as no longer to bind
any associated person (except in circumstances in which
subsection (4)(aa) applies), or.

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(3) After that subsection insert—

(1A) Subsection (1)(a) does not apply if, at the time of the acquisition,
there was an actual or contingent liability to make one or more
further payments equal to the amount initially outstanding for the
5employment-related securities.

(4) In subsection (4), omit the “or” at the end of paragraph (a) and after that
paragraph insert—

(aa) the employment-related securities, together with the liability
to make such further payment or payments, are disposed of
10otherwise than to an associated person and for consideration
of an amount that reflects the transfer of the liability, or.

34 In section 554N (exclusions from Chapter 2 of Part 7A: other cases involving
employment related securities etc), in subsection (6), after “429,” insert
“430A(5)(b),”.

15Part 3 Corporation tax relief for employee share acquisitions

35 Part 12 of CTA 2009 (other relief for employee share acquisitions) is
amended as follows.

36 In Chapter 1 (introduction), in section 1002 (“employment”), after subsection
20(4) insert—

(5) See also sections 1007A(2), 1015B(2), 1025B(2) and 1030B(2) (deemed
employment for the purposes of Chapters 2, 3, 4 and 5 of certain
employees of overseas companies who work for companies in the
UK).

37 25In section 1005 (other definitions)—

(a) at the end of the definition of “the employee” insert “(see also
sections 1025A(7) and 1030A(8))”, and

(b) in the definition of “the qualifying business”, for “or 1015(1)(b)”
substitute “, 1015(1)(b), 1025A(1)(d)(i) or 1030A(1)(d)(ii)”.

38 30In Chapter 2 (corporation tax relief if shares are acquired by employee or
other person), after section 1007 insert—

1007A Application of Chapter in relation to employees of overseas
companies who work for companies in the UK

(1) This section applies if—

(a) 35a person has an employment (“the actual employment”) with
a non-UK resident company not within the charge to
corporation tax (“the overseas employer”),

(b) in performing any of the duties of the actual employment, the
person works in the United Kingdom for, but is not
40employed by, another company (“the host employer”), and

(c) the host employer is—

(i) a UK resident company, or

(ii) a non-UK resident company within the charge to
corporation tax.

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(2) For the purposes of this Chapter, the person is to be treated as having
an employment with the host employer (“the deemed
employment”), the duties of which consist of the work the person
does for the host employer.

(3) 5Subsection (4) applies if—

(a) shares (“relevant shares”) are acquired because of the actual
employment, and

(b) because of the work the person does for the host employer, an
amount of employment income of the person is charged to
10tax under ITEPA 2003 in relation to the acquisition of the
relevant shares.

(4) For the purposes of section 1007(1)(c) (requirement that shares are
acquired because of employment) the relevant shares are (regardless
of when the acquisition takes place) to be treated, so far as would not
15otherwise be the case, as if they are acquired because of the deemed
employment.

(5) In section 1008 (conditions relating to the shares acquired) references
to the employing company are to be read as including references to
the overseas employer.

(6) 20If, in relation to an acquisition of shares, the amount of relief would
otherwise be more than the total amount of employment income of
the person charged to tax under ITEPA 2003, the amount of relief is
(notwithstanding any other provision of this Chapter) limited to the
total amount of that income so charged.

(7) 25If relief is available to more than one company in respect of the same
acquisition of shares, relief may only be given to one of them in
respect of that acquisition.

(8) For the purposes of this section a person works for another person if
the person provides, and is obliged to provide, personal service to
30the other person.

39 In Chapter 3 (corporation tax relief if employee or other person obtains
option to acquire shares), after section 1015 insert—

1015A Application of Chapter: employees of overseas companies who take
up employment with a UK company

(1) 35This section applies if—

(a) a person (“E”) has, or had, an employment with a non-UK
resident company not within the charge to corporation tax
(“the overseas employment”),

(b) E or another person obtains an option to acquire shares
40because of the overseas employment,

(c) E has an employment (“the UK employment”) with a
company that is a UK resident company or a non-UK resident
company within the charge to corporation tax,

(d) the person who obtained the option acquires shares pursuant
45to it, and

(e) subsection (2) applies.

(2) This subsection applies if—

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(a) an amount of employment income of E is charged to tax
under ITEPA 2003 in relation to the acquisition because of the
UK employment, or

(b) it is because of the UK employment that E or another person
5is able to acquire the shares pursuant to the option.

(3) For the purposes of section 1015(1)(c) (requirement that option is
obtained because of employment), the option is (regardless of when
it is obtained) to be treated as if it is obtained because of the UK
employment.

(4) 10In section 1016 (conditions relating to the shares acquired) references
to the employing company are to be read as including references to
the company mentioned in subsection (1)(a).

(5) If, in relation to the acquisition, an amount of relief would otherwise
be available that is more than the total amount of employment
15income of E charged to tax under ITEPA 2003, the amount of relief is
(notwithstanding any other provision of this Chapter) limited to the
total amount of that income so charged.

(6) If relief is available to more than one company in respect of the same
acquisition of shares pursuant to an option, relief may only be given
20to one of them in respect of that acquisition.

1015B Application of Chapter in relation to employees of overseas
companies who work for companies in the UK

(1) This section applies if—

(a) a person has an employment (“the actual employment”) with
25a non-UK resident company not within the charge to
corporation tax (“the overseas employer”),

(b) in performing any of the duties of the actual employment, the
person works in the United Kingdom for, but is not
employed by, another company (“the host employer”), and

(c) 30the host employer is—

(i) a UK resident company, or

(ii) a non-UK resident company within the charge to
corporation tax.

(2) For the purposes of this Chapter, the person is to be treated as having
35an employment (“the deemed employment”) with the host
employer, the duties of which consist of the work the person does for
the host employer.

(3) Subsection (4) applies if—

(a) an option to acquire shares (“the relevant option”) is obtained
40because of the actual employment,

(b) shares are acquired pursuant to the relevant option, and

(c) because of the work the person does for the host employer, an
amount of employment income of the person is charged to
tax under ITEPA 2003 in relation to the acquisition of the
45shares.

(4) For the purposes of section 1015(1)(c) (requirement that option is
obtained because of employment), the relevant option is (regardless

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of when it is obtained) to be treated, so far as would not otherwise be
the case, as if it is obtained because of the deemed employment.

(5) In section 1016 (conditions relating to the shares acquired) references
to the employing company are to be read as including references to
5the overseas employer.

(6) If, in relation to an acquisition of shares pursuant to an option, the
amount of relief would otherwise be more than the total amount of
employment income of the person charged to tax under ITEPA 2003,
the amount of relief is (notwithstanding any other provision of this
10Chapter) limited to the total amount of that income so charged.

(7) If relief is available to more than one company in respect of the same
acquisition of shares pursuant to an option, relief may only be given
to one of them in respect of that acquisition.

(8) For the purposes of this section a person works for another person if
15the person provides, and is obliged to provide, personal service to
the other person.

40 (1) Section 1016 (conditions relating to shares acquired) is amended as follows.

(2) In subsection (1), omit the “or” at the end of paragraph (b) of Condition 2 and
after paragraph (c) of that Condition insert , or

(d) 20shares within subsection (1A).

(3) After subsection (1) insert—

(1A) Shares are within this subsection if—

(a) after the option is obtained, the company in which the shares
are to be acquired (“the relevant company”) comes to be
25controlled by another company (“the takeover”),

(b) immediately before the takeover, the shares were within any
of paragraphs (a) to (c) of Condition 2,

(c) as a result of the takeover, the shares cease to be within any
of those paragraphs,

(d) 30the shares are acquired pursuant to the option within the
period of 90 days beginning with the day of the takeover, and

(e) the avoidance of tax is not the main purpose (or one of the
main purposes) of the takeover.

41 In Chapter 4 (additional corporation tax relief in cases involving restricted
35shares), after section 1025 insert—

1025A Application of Chapter: employees of overseas companies who take
up employment with, or work for, a UK company

(1) This section applies if—

(a) a person (“E”) has, or had, an employment (“the overseas
40employment”) with a non-UK resident company not within
the charge to corporation tax (“the overseas company”),

(b) E or another person acquired restricted shares because of the
overseas employment (whether or not pursuant to an
option),

(c) 45the case is not within section 1025(1)(a),

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(d) relief under Chapter 2 or 3 would have been available to the
overseas company in relation to the acquisition if, at all
material times—

(i) the overseas company had carried on a business
5within subsection (2) (“a qualifying business”), and

(ii) the overseas employment had related to that
business,

(e) E has a UK employment with a UK company (see subsections
(3) and (4)),

(f) 10the UK employment is in relation to a qualifying business
carried on by the UK company,

(g) an event occurs that is a chargeable event in relation to the
restricted shares for the purposes of section 426 of ITEPA
2003, and

(h) 15because of the UK employment, an amount of employment
income of E is charged to tax under ITEPA 2003 in relation to
the chargeable event.

For the purposes of paragraph (d) it does not matter if the amount of
the relief would have been calculated as nil.

(2) 20A business is within this subsection so far as—

(a) it is carried on by a company, and

(b) the company is within the charge to corporation tax in
relation to the profits of the business or would be but for
section 18A.

(3) 25A company is a “UK company” if it is a UK resident company or a
non-UK resident company within the charge to corporation tax.

(4) E has a “UK employment” with a UK company if—

(a) E is employed by the UK company, or

(b) E is not employed by the UK company but provides, and is
30obliged to provide, personal service to the UK company, in
the course of performing the duties of the overseas
employment (in which case, references to the UK
employment are to the personal service E provides).

(5) Relief under this Chapter is available to the UK company as a result
35of the chargeable event.

(6) References in this Chapter to the original relief (other than in section
1025B) are to be treated as references to the relief that would have
been available as mentioned in subsection (1)(d).

(7) In section 1026(3) (amount of relief on occurrence of chargeable
40event), the reference to the employee is to be read as a reference to E.

(8) For the purposes of section 1028(2) (giving relief), as that provision
has effect by virtue of subsection (6), in section 1013(2) to (5) or (as
the case may be) 1021(2) to (5)—

(a) references to the employing company are to be treated as
45references to the UK company,

(b) the reference to the relevant employment is to be treated as a
reference to the UK employment, and

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(c) references to a business within section 1007(2) or (as the case
may be) 1015(2) are to be treated as references to a business
within subsection (2).

(9) If, in relation to the chargeable event, the amount of relief available
5would otherwise be more than the total amount of employment
income of E charged to tax under ITEPA 2003, the amount of relief is
(notwithstanding any other provision of this Chapter) limited to the
total amount of that income so charged.

(10) If relief is available to more than one company as a result of the same
10chargeable event, relief may only be given to one of them in respect
of that event.

1025B Application of Chapter where original relief a consequence of section
1007A, 1015A or 1015B

(1) This section applies if the original relief is available under—

(a) 15Chapter 2 as a consequence of section 1007A, or

(b) Chapter 3 as a consequence of section 1015A or 1015B.

(2) If the original relief is available as a consequence of section 1007A or
1015B, subsection (2) of the section concerned applies for the
purposes of this Chapter.

(3) 20If, in relation to a chargeable event, the amount of relief available
would otherwise be more than the total amount of employment
income of the employee charged to tax under ITEPA 2003, the
amount of relief is (notwithstanding any other provision of this
Chapter) limited to the total amount of that income so charged.

(4) 25If relief is available to more than one company as a result of the same
chargeable event, relief may only be given to one of them in respect
of that event.

(5) No relief is available as a result of the employee’s death.

42 In Chapter 5 (additional corporation tax relief in cases involving convertible
30securities), after section 1030 insert—

1030A Application of Chapter: employees of overseas companies who take
up employment with, or work for, a UK company

(1) This section applies if—

(a) a person (“E”) has, or had, an employment (“the overseas
35employment”) with a non-UK resident company not within
the charge to corporation tax (“the overseas company”),

(b) E or another person acquired convertible securities because
of the overseas employment (whether or not pursuant to an
option),

(c) 40the case is not within section 1030(1) or (2),

(d) relief under Chapter 2 or 3 would have been available to the
overseas company in relation to the acquisition if—

(i) in a case in which the convertible securities were not
shares, they had been shares in relation to which the
45conditions set out in section 1008 or (as the case may
be) 1016 were met, and

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(ii) at all material times, the overseas company had
carried on a business within subsection (2) (“a
qualifying business”) and the overseas employment
had related to that business,

(e) 5E has a UK employment with a UK company (see subsections
(3) and (4)),

(f) the UK employment is in relation to a qualifying business
carried on by the UK company,

(g) an event occurs that is a chargeable event (within the
10meaning given by section 1032 modified in accordance with
subsections (6) and (7)) in relation to the convertible
securities, and

(h) because of the UK employment, an amount of employment
income of E is charged to tax under ITEPA 2003 in relation to
15the chargeable event.

For the purposes of paragraph (d) it does not matter if the amount of
the relief would have been calculated as nil.

(2) A business is within this subsection so far as—

(a) it is carried on by a company, and

(b) 20the company is within the charge to corporation tax in
relation to the profits of the business or would be but for
section 18A.

(3) A company is a “UK company” if it is a UK resident company or a
non-UK resident company within the charge to corporation tax.

(4) 25E has a “UK employment” with a UK company if—

(a) E is employed by the UK company, or

(b) E is not employed by the UK company but provides, and is
obliged to provide, personal service to the UK company, in
the course of performing the duties of the overseas
30employment (in which case, references to the UK
employment are to the personal service E provides).

(5) Relief under this Chapter is available to the UK company as a result
of the chargeable event.

(6) References in this Chapter to the original relief (other than in section
351030B) are to be treated as references to the relief that would have
been available as mentioned in subsection (1)(d).

(7) For the purposes of section 1032(2), references to the employing
company in the conditions set out in section 1008 or (as the case may
be) 1016 are to be read as references to the overseas company or the
40UK company.

(8) In section 1033(3) (amount of relief available on occurrence of
chargeable event), the reference to the employee is to be read as a
reference to E.

(9) For the purposes of section 1035(2) (giving relief), as that provision
45has effect by virtue of subsection (6), in section 1013(2) to (5) or (as
the case may be) 1021(2) to (5)—

(a) references to the employing company are to be treated as
references to the UK company,

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(b) the reference to the relevant employment is to be treated as a
reference to the UK employment, and

(c) references to a business within section 1007(2) or (as the case
may be) 1015(2) are to be treated as references to a business
5within subsection (2).

(10) If, in relation to the chargeable event, the amount of relief available
would otherwise be more than the total amount of employment
income of E charged to tax under ITEPA 2003, the amount of relief is
(notwithstanding any other provision of this Chapter) limited to the
10total amount of that income so charged.

(11) If relief is available to more than one company as a result of the same
chargeable event, relief may only be given to one of them in respect
of that event.

1030B Application of Chapter where original relief a consequence of section
151007A, 1015A or 1015B

(1) This section applies if the original relief is, or would have been,
available under—

(a) Chapter 2 as a consequence of section 1007A, or

(b) Chapter 3 as a consequence of section 1015A or 1015B.

(2) 20If the original relief is, or would have been, available as a
consequence of section 1007A or 1015B, subsection (2) of the section
concerned applies for the purposes of this Chapter.

(3) Section 1007A(5), 1015A(4) or (as the case may be) 1015B(5) applies
for the purposes of section 1032(2).

(4) 25If, in relation to a chargeable event, the amount of relief available
would otherwise be more than the total amount of employment
income of the employee charged to tax under ITEPA 2003, the
amount of relief is (notwithstanding any other provision of this
Chapter) limited to the total amount of that income so charged.

(5) 30If relief is available to more than one company as a result of the same
chargeable event, relief may only be given to one of them in respect
of that event.

(6) No relief is available as a result of the employee’s death.

Part 4 35Commencement etc

43 Part 1 and paragraphs 36 to 39, 41 and 42 of Part 3 of this Schedule come into
force on 6 April 2015.

44 The amendments made by Part 1 have effect on and after that date in relation
to employment-related securities and employment-related securities
40options irrespective of the date of the acquisition.

45 The Treasury may by regulations—

(a) make transitional provision or savings in connection with the
coming into force of any of the provisions mentioned in paragraph
43;

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