Finance (No. 2) Bill (HC Bill 155)

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(13) Sub-paragraph (1) does not apply in relation to—

(a) the amendments in section 401B of ITTOIA 2005;

(b) the amendment in paragraph 14 of Schedule 19 to FA 2009.

Section 12

SCHEDULE 2 5Sporting testimonial payments

Income tax: sporting testimonial payments treated as earnings

1 After section 226D of ITEPA 2003 (shareholder or connected person having
material interest in company) insert—

“Sporting testimonial payments

226E 10Sporting testimonial payments

(1) This section applies in relation to an individual who is or has been
employed as a professional sportsperson (“S”).

(2) In this section “sporting testimonial” means—

(a) a series of relevant events or activities which each have the
15same controller, or

(b) a single relevant event or activity not forming part of such a
series.

(3) An event or activity is (subject to subsection (4)(b)) a relevant event
or activity if—

(a) 20its purpose (or one of its purposes) is to raise money for or for
the benefit of S, and

(b) the only or main reason for doing that is to recognise S’s
service as a professional sportsperson who is or has been
employed as such.

(4) 25An activity that meets the conditions in subsection (3)(a) and (b) and
consists solely of inviting and collecting donations for or for the
benefit of S—

(a) is a relevant activity if it is one of a series of relevant events
or activities for the purposes of subsection (2)(a), but

(b) 30is not a relevant activity for the purposes of subsection (2)(b)
so long as both conditions in subsection (5) are met while the
activity takes place.

(5) The conditions are—

(a) that any person who is responsible (alone or with others) for
35collecting the donations or who is the controller (or a member
of a committee which is the controller) of the activity is not—

(i) S,

(ii) a person who is (or has been) the controller of any
other relevant event or activity for or for the benefit of
40S,

(iii) a person connected with S or a person mentioned in
sub-paragraph (ii),

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(iv) a person acting for or on behalf of a person mentioned
in sub-paragraphs (i) to (iii), and

(b) that the donations collected do not include any sums paid
(directly or indirectly) out of money raised by any other
5relevant event or activity.

(6) A “sporting testimonial payment” is a payment made by (or on
behalf of) the controller of a sporting testimonial out of money raised
for or for the benefit of S which—

(a) is made to S, to a member of S’s family or household, to a
10prescribed person, to S’s order or otherwise for S’s benefit,
and

(b) does not (apart from this section) constitute earnings from an
employment.

(7) A sporting testimonial payment is to be treated as earnings of S from
15the employment or former employment to which the sporting
testimonial is most closely linked.

(8) For the purposes of this section if at any material time S is dead—

(a) anything done for or for the benefit of S’s estate is to be
regarded as done for or for the benefit of S; and

(b) 20a payment made to S’s personal representatives or to their
order is to be treated as a payment to S or to S’s order.

(9) In this section—

  • “controller”, in relation to an event or activity which meets the
    conditions in subsection (3)(a) and (b), means the person who
    25controls the disbursement of any money raised for or for the
    benefit of S from that event or activity,

  • “money” includes money’s worth and “payment” includes the
    transfer of money’s worth or the provision of any benefit,

  • “prescribed person” means a person prescribed in regulations
    30made by the Treasury.

(10) Section 993 of ITA 2007 (meaning of “connected” persons) has effect
for the purposes of this section.”

Income tax: limited exemption for sporting testimonial payments

2 After section 306A of ITEPA 2003 (exemption for carers) insert—

35Professional sportspersons

306B Limited exemption for sporting testimonial payments

(1) This section applies to any sporting testimonial payments which
are—

(a) made out of money raised by a sporting testimonial (“the
40sporting testimonial”), and

(b) treated by virtue of section 226E as earnings of a person (“S”).

(2) No liability to income tax arises in respect of sporting testimonial
payments to which this section applies.

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(3) Subsection (2) has effect subject to and in accordance with the
following provisions.

(4) It only applies—

(a) if the controller of the relevant event or activity (or of all the
5relevant events or activities in a series) constituting the
sporting testimonial is an independent person,

(b) if S has not already benefitted from an exemption under this
section in relation to one or more sporting testimonial
payments made out of money raised by another sporting
10testimonial, and

(c) where the sporting testimonial consists of a series of relevant
events or activities taking place over more than a year, if the
sporting testimonial payment is made out of money raised by
events or activities taking place within the period of one year
15beginning with the day on which the first event or activity in
the series took place.

(5) It only applies to the first £100,000 of sporting testimonial payments
made out of money raised by the sporting testimonial.

(6) If sporting testimonial payments are made (out of money raised by
20the sporting testimonial) in two or more tax years, any part of the
exempt amount that is not used in the first of those years is to be
carried forward to the next tax year (and so on).

(7) This section applies to sporting testimonial payments made to or to
the order of the personal representatives of S (where S has died) but
25only if the payments are made within the period of 24 months
beginning with the date of death.

(8) In subsection (4)(a) “independent person” means a person who is not
(or where the controller is a committee, a committee none of whose
members are)—

(a) 30S or a person connected with S,

(b) an employer or former employer of S or a person connected
with an employer or former employer of S, or

(c) a person acting for or on behalf of a person mentioned in
paragraph (a) or (b).

(9) 35If the first relevant event or activity in a series took place before 6
April 2017, subsection (4)(c) has effect as if it referred to the year
beginning with 6 April 2017.

(10) Section 993 of ITA 2007 (meaning of “connected” persons) has effect
for the purposes of this section.

(11) 40Terms used in this section and section 226E have the same meaning
as in that section.”

Corporation tax: deductions from total profits for sporting testimonial payments and associated
payments

3 After section 996 of CTA 2010 (miscellaneous provisions: use of different

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accounting periods within a group of companies) insert—

“Sporting testimonial payments and associated payments

996A Deductions from total profits for sporting testimonial payments and
associated payments

(1) 5This section applies where a company, in any accounting period—

(a) is the controller of a relevant event or activity that constitutes
or is part of a sporting testimonial, and

(b) makes a relevant sporting testimonial payment out of money
raised by the sporting testimonial.

(2) 10In this section “relevant sporting testimonial payment” means a
sporting testimonial payment that is (or so much of it as is) made out
of proceeds of a relevant event or activity which are brought into
account in determining the company’s total profits or any
component of its total profits.

(3) 15In calculating the amount of corporation tax chargeable for the
accounting period, an amount equal to the aggregate of the following
amounts is allowed as a deduction from the company’s total
profits—

(a) so much of the relevant sporting testimonial payment as is
20paid to or for the benefit of the sportsperson to whom the
sporting testimonial relates,

(b) any income tax or employee’s national insurance
contributions deducted at source from that payment, and

(c) any employer’s national insurance contributions relating to
25that payment.

(4) The amount is deducted—

(a) from the company’s total profits for the accounting period in
which the relevant sporting testimonial payment is made,
and

(b) 30if a claim by the company for relief so requires, previous
accounting periods.

(5) A claim under subsection (4)(b) must be made within 2 years after
the end of the accounting period in which the relevant sporting
testimonial payment is made.

(6) 35If for an accounting period deductions under subsection (4) are to be
made for relevant sporting testimonial payments made in more than
one accounting period, the deductions are to be made in the order in
which the payments were made (starting with the earliest of them).

(7) The amount of the deduction to be made under subsection (4) for an
40accounting period is the amount that cannot be deducted under that
subsection for a subsequent accounting period.

(8) The amount of the deduction to be made for any accounting period
is limited to the amount that reduces the company’s taxable total
profits for that period to nil.

(9) 45The deduction is only available if and to the extent that the amount
mentioned in subsection (3) is not otherwise deductible in

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calculating the company’s total profits or any component of its total
profits.

(10) Terms used in this section and in section 226E of ITEPA 2003 have
the same meaning as in that section.”

5Application of this Schedule

4 (1) The amendments made by this Schedule have effect in relation to a sporting
testimonial payment made out of money raised by a sporting testimonial
if—

(a) the sporting testimonial was made public on or after 25 November
102015, and

(b) the payment is made out of money raised by one or more relevant
events or activities which take place on or after 6 April 2017.

(2) Terms used in sub-paragraph (1) and section 226E of ITEPA 2003 (as inserted
by paragraph 1) have the same meaning as in that section.

Section 16

15SCHEDULE 3 Employee share schemes: minor amendments

Enterprise management incentives and employee ownership trusts

1 (1) In section 534 of ITEPA 2003 (disqualifying events relating to relevant
company), at the end insert—

(7) 20Subsection (1) does not apply where the relevant company is subject
to an employee-ownership trust (within the meaning of paragraph
27(4) to (6) of Schedule 2).”

(2) The amendment made by this paragraph is treated as having come into force
on 1 October 2014.

25Share incentive plans

2 (1) Schedule 2 to ITEPA 2003 (share incentive plans) is amended as follows.

(2) In paragraph 1 (introduction), after sub-paragraph (4) insert—

(5) Sub-paragraph (A1) is also subject to Part 10A of this Schedule
(disqualifying events).”

(3) 30After Part 10 insert—

“Part 10A Disqualifying events

(1) A SIP ceases to be a Schedule 2 SIP if (and with effect from the time
when) a disqualifying event occurs.

(2) 35The following are disqualifying events—

(a) an alteration being made in—

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(i) the share capital of a company any of whose shares
are subject to the plan trust, or

(ii) the rights attaching to any shares of such a
company,

5that materially affects the value of the shares that are
subject to the plan trust;

(b) shares of a class of shares that is subject to the plan trust
receiving different treatment in any respect from the other
shares of that class.

(3) 10Sub-paragraph (2)(b) applies in particular to different treatment in
respect of—

(a) the dividend payable,

(b) repayment, or

(c) any offer of substituted or additional shares, securities or
15rights of any description in respect of the shares.

(4) Sub-paragraph (2)(b) does not however apply where the
difference in treatment arises from—

(a) a key feature of the plan, or

(b) any of the participants’ shares being subject to any
20restriction.

(5) Nor does sub-paragraph (2)(b) apply as a result only of the fact
that shares which have been newly issued receive, in respect of
dividends payable with respect to a period beginning before the
date on which they were issued, treatment less favourable than
25that accorded to shares issued before that date.

(6) For the purposes of this paragraph a “key feature” of a plan is a
provision of it that is necessary to meet the requirements of this
Schedule.

(7) This paragraph does not affect the operation of the SIP code in
30relation to shares awarded to participants in the plan before the
disqualifying event occurred.”

(4) The amendments made by this paragraph have effect in relation to
disqualifying events occurring on or after the day on which this Act is
passed.

35Notification of plans and schemes to HMRC

3 (1) In Schedule 2 to ITEPA 2003 (share incentive plans), Part 10 (notification of
plans etc) is amended as follows.

(2) In paragraph 81A (notice of SIP to be given to HMRC), after sub-paragraph
(5) insert—

(5A) 40Sub-paragraph (5) does not apply if the company satisfies HMRC
(or, on an appeal under paragraph 81K, the tribunal) that there is
a reasonable excuse for failing to give notice on or before the initial
notification deadline.

(5B) Paragraph 81C(9) (what constitutes a reasonable excuse) applies
45for the purposes of sub-paragraph (5A).

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(5C) Where HMRC are required under sub-paragraph (5A) to consider
whether there was a reasonable excuse, HMRC must notify the
company of their decision within the period of 45 days beginning
with the day on which HMRC received the company’s request to
5consider the excuse.

(5D) Where HMRC are required to notify the company as specified in
sub-paragraph (5C) but do not do so—

(a) HMRC are to be treated as having decided that there was
no reasonable excuse, and

(b) 10HMRC must notify the company of the decision which
they are treated as having made.”

(3) In paragraph 81K (appeals)—

(a) at the beginning insert—

(A1) The company may appeal against a decision of HMRC
15under paragraph 81A(5A) that there was no reasonable
excuse for its failure to give notice on or before the initial
notification deadline.”;

(b) in sub-paragraph (6), before paragraph (a) insert—

(za) in the case of an appeal under sub-paragraph (A1),
20notice of HMRC’s decision is given to the
company;”;

(c) in sub-paragraph (7), after “sub-paragraph” insert “(A1),”.

(4) The amendments made by this paragraph have effect in relation to notices
given under paragraph 81A of Schedule 2 to ITEPA 2003 on or after 6 April
252016.

4 (1) In Schedule 3 to ITEPA 2003 (SAYE option schemes), Part 8 (notification of
schemes etc) is amended as follows.

(2) In paragraph 40A (notice of scheme to be given to HMRC), after sub-
paragraph (5) insert—

(5A) 30Sub-paragraph (5) does not apply if the scheme organiser satisfies
HMRC (or, on an appeal under paragraph 40K, the tribunal) that
there is a reasonable excuse for the failure to give notice on or
before the initial notification deadline.

(5B) Paragraph 40C(9) (what constitutes a reasonable excuse) applies
35for the purposes of sub-paragraph (5A).

(5C) Where HMRC are required under sub-paragraph (5A) to consider
whether there was a reasonable excuse, HMRC must notify the
scheme organiser of their decision within the period of 45 days
beginning with the day on which HMRC received the scheme
40organiser’s request to consider the excuse.

(5D) Where HMRC are required to notify the scheme organiser as
specified in sub-paragraph (5C) but do not do so—

(a) HMRC are to be treated as having decided that there was
no reasonable excuse, and

(b) 45HMRC must notify the scheme organiser of the decision
which they are treated as having made.”

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(3) In paragraph 40K (appeals)—

(a) at the beginning insert—

(A1) The scheme organiser may appeal against a decision of
HMRC under paragraph 40A(5A) that there was no
5reasonable excuse for the failure to give notice on or before
the initial notification deadline.”;

(b) in sub-paragraph (5), before paragraph (a) insert—

(za) in the case of an appeal under sub-paragraph (A1),
notice of HMRC’s decision is given to the scheme
10organiser;”;

(c) in sub-paragraph (6), after “sub-paragraph” insert “(A1),”.

(4) The amendments made by this paragraph have effect in relation to notices
given under paragraph 40A of Schedule 3 to ITEPA 2003 on or after 6 April
2016.

5 (1) 15In Schedule 4 to ITEPA 2003 (CSOP schemes), Part 7 (notification of schemes
etc) is amended as follows.

(2) In paragraph 28A (notice of scheme to be given to HMRC), after sub-
paragraph (5) insert—

(5A) Sub-paragraph (5) does not apply if the scheme organiser satisfies
20HMRC (or, on an appeal under paragraph 28K, the tribunal) that
there is a reasonable excuse for the failure to give notice on or
before the initial notification deadline.

(5B) Paragraph 28C(9) (what constitutes a reasonable excuse) applies
for the purposes of sub-paragraph (5A).

(5C) 25Where HMRC are required under sub-paragraph (5A) to consider
whether there was a reasonable excuse, HMRC must notify the
scheme organiser of their decision within the period of 45 days
beginning with the day on which HMRC received the scheme
organiser’s request to consider the excuse.

(5D) 30Where HMRC are required to notify the scheme organiser as
specified in sub-paragraph (5C) but do not do so—

(a) HMRC are to be treated as having decided that there was
no reasonable excuse, and

(b) HMRC must notify the scheme organiser of the decision
35which they are treated as having made.”

(3) In paragraph 28K (appeals)—

(a) at the beginning insert—

(A1) The scheme organiser may appeal against a decision of
HMRC under paragraph 28A(5A) that there was no
40reasonable excuse for the failure to give notice on or before
the initial notification deadline.”;

(b) in sub-paragraph (5), before paragraph (a) insert—

(za) in the case of an appeal under sub-paragraph (A1),
notice of HMRC’s decision is given to the scheme
45organiser;”;

(c) in sub-paragraph (6), after “sub-paragraph” insert “(A1),”.

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(4) The amendments made by this paragraph have effect in relation to notices
given under paragraph 28A of Schedule 4 to ITEPA 2003 on or after 6 April
2016.

Price for acquisition of shares under share option

6 (1) 5In Schedule 3 to ITEPA 2003 (SAYE option schemes), paragraph 28
(requirements as to price for acquisition of shares) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (b), for “at that time” substitute

(i) at that time, or

(ii) 10at such earlier time as may be determined in
accordance with guidance issued by the
Commissioners for Her Majesty’s Revenue
and Customs.”

(b) for “sub-paragraphs (2) and (3)” substitute “sub-paragraph (3)”.

7 (1) In Schedule 4 to ITEPA 2003 (CSOP schemes), paragraph 22 (requirements
as to price for acquisition of shares) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (b), for “at the time when the option is granted”
20substitute

(i) at the time when the option is granted, or

(ii) at such earlier time as may be determined in
accordance with guidance issued by the
Commissioners for Her Majesty’s Revenue
25and Customs.”;

(b) for “sub-paragraphs (2) and (3)” substitute “sub-paragraph (3)”.

Tag-along rights

8 (1) In Schedule 5 to ITEPA 2003 (enterprise management incentives), in
30paragraph 39 (company reorganisations: introduction), in sub-paragraph
(2)(c), after “982” insert “or 983 to 985”.

(2) The amendment made by this paragraph is treated as having come into force
on 17 July 2013.

Exercise of EMI options

9 (1) 35In section 238A of TCGA 1992 (share schemes and share incentives), in
subsection (2), omit paragraph (d) and the preceding “and”.

(2) In Schedule 7D to TCGA 1992 (share schemes and share incentives), omit
Part 4.

(3) In section 527 of ITEPA 2003 (enterprise management incentives: qualifying
40options), in subsection (3)—

(a) after paragraph (a) insert “and”;

(b) omit paragraph (c) and the preceding “and”.

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(4) The amendments made by this paragraph do not affect—

(a) the application of paragraph 14(4) of Schedule 7D to TCGA 1992 in
relation to a disqualifying event occurring before 6 April 2016, or

(b) the application of paragraph 16 of that Schedule in relation to an
5allotment for payment mentioned in section 126(2)(a) of that Act
taking place before 6 April 2016.

Section 19

SCHEDULE 4 Pensions: lifetime allowance: transitional provision

Part 1 10“Fixed protection 2016”

The protection

1 (1) Sub-paragraph (2) applies at any particular time on or after 6 April 2016 in
the case of an individual if—

(a) each of the conditions specified in paragraph 2 is met,

(b) 15there is no protection-cessation event (see paragraph 3) in the period
beginning with 6 April 2016 and ending with the particular time,

(c) paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection
2014”) does not apply in the individual’s case at the particular time,
and

(d) 20at the particular time or any later time, the individual has a reference
number (see Part 3 of this Schedule) for the purposes of sub-
paragraph (2).

(2) Part 4 of FA 2004 has effect in relation to the individual as if the standard
lifetime allowance were the greater of the standard lifetime allowance and
25£1,250,000.

The initial conditions

2 The conditions mentioned in paragraph 1(1)(a) are—

(a) that, on 6 April 2016, the individual has one or more arrangements
under—

(i) 30a registered pension scheme, or

(ii) a relieved non-UK pension scheme of which the individual is
a relieved member,

(b) that paragraph 7 of Schedule 36 to FA 2004 (primary protection) does
not make provision for a lifetime allowance enhancement factor in
35relation to the individual,

(c) that paragraph 12 of that Schedule (enhanced protection) does not
apply in the individual’s case on 6 April 2016,

(d) that paragraph 14 of Schedule 18 to FA 2011 (transitional provision
relating to new standard lifetime allowance for the tax year 2012-13)
40does not apply in the individual’s case on 6 April 2016, and