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Disposal of shares |
| | 12. - (1) In subsection (1) of section 299 of the Taxes Act 1988-
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(a) for the words from the beginning to "relevant period" there shall be substituted the words "Subject to section 304(1), where an individual makes, before the end of the relevant period, any disposal of eligible shares to which relief is attributable"; and |
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(b) in paragraphs (a) and (b)(ii), for the words "any relief" there shall be substituted the words "the relief". |
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(2) In subsection (3) of that section-
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(a) for the words "any issue of shares held by any person" there shall be substituted the words "any issue of eligible shares held by any individual"; and |
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(b) for the words "the shares" there shall be substituted the words "the issue". |
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(3) In subsection (4) of that section-
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(a) after the words "any issue of" there shall be inserted the word "eligible"; and |
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(b) after the word "shares" there shall be inserted the words "issued in that year (or treated by section 289B(5) as so issued)". |
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(4) After subsection (5) of that section there shall be inserted the following subsection-
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"(5A) The shares to which such an option relates shall be taken to be those which, if-
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(a) the option were exercised immediately after the grant; and |
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(b) any shares in the company acquired by the individual after the grant were disposed of immediately after being acquired, |
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would be treated for the purposes of this section as disposed of in pursuance of the option."
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(5) For subsection (6) of that section there shall be substituted the following subsections-
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"(6) Where shares of any class in a company have been acquired by an individual on different days, any disposal by him of shares of that class shall be treated for the purposes of this section as relating to those acquired on an earlier day rather than to those acquired on a later day.
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(6A) Where shares of any class in a company have been acquired by an individual on the same day, any of those shares disposed of by him shall be treated for the purposes of this section as disposed of in the following order, namely-
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(a) first any to which neither relief under this Chapter nor deferral relief is attributable; |
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(b) next any to which deferral relief, but not relief under this Chapter, is attributable; |
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(c) next any to which relief under this Chapter, but not deferral relief, is attributable; and |
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(d) finally any to which both relief under this Chapter and deferral relief are attributable; |
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and in this subsection and subsection (6C) below "deferral relief" has the same meaning as in Schedule 5B to the 1992 Act.
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(6B) Any shares falling within paragraph (c) or (d) of subsection (6A) above which are treated by section 289B(5) as issued on an earlier day shall be treated as disposed of before any other shares falling within that paragraph.
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(6C) The following, namely-
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(a) any shares to which relief under this Chapter is attributable and which were transferred to an individual as mentioned in section 304; and |
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(b) any shares to which deferral relief, but not relief under this Chapter, is attributable and which were acquired by an individual on a disposal to which section 58 of the 1992 Act applies, |
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shall be treated for the purposes of subsections (6) and (6A) above as acquired by him on the day on which they were issued.
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(6D) In a case to which section 127 of the 1992 Act applies (whether or not by virtue of section 135(3) of that Act), shares comprised in the new holding shall be treated for the purposes of subsections (6) and (6A) above as acquired when the original shares were acquired.
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In this subsection "new holding" and "original shares" shall be construed in accordance with sections 126, 127, 135 and 136 of the 1992 Act."
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(6) Subsection (7) of that section shall cease to have effect.
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(7) Subsection (8)(a) of that section shall cease to have effect.
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(8) Sub-paragraphs (1), (3)(b), (5) and (6) above have effect in relation to disposals made on or after 6th April 1998.
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(9) Sub-paragraph (4) above has effect in relation to options granted on or after that date.
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Value received from company |
| | 13. - (1) For subsection (1) of section 300 of the Taxes Act 1988 there shall be substituted the following subsection-
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"(1) Subsection (1A) below applies where an individual who subscribes for eligible shares in a company receives any value from the company at any time in the seven year period."
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(2) For subsection (1C) of that section there shall be substituted the following subsection-
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"(1C) References in subsection (1) above to the receipt of value from a company include references to the receipt of value from a person who at any time in the relevant period is connected with the company, whether or not he is so connected at the time when the individual concerned receives the value from him; and other references to the company in this section and section 301 shall be read accordingly."
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(3) After subsection (5) of that section there shall be inserted the following subsection-
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"(6) Where by reason of an individual's disposal of shares in a company any relief attributable to those shares is withdrawn or reduced under section 299, the individual shall not be treated for the purposes of this section as receiving value from the company in respect of the disposal."
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(4) Sub-paragraph (3) above has effect in relation to disposals made on or after 6th April 1998.
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| | 14. - (1) After subsection (4) of section 301 of the Taxes Act 1988 there shall be inserted the following subsection-
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"(4A) For the purposes of this section and section 300, an individual who acquires any eligible shares on such a transfer as is mentioned in section 304 shall be treated as if he subscribed for those shares."
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(2) In subsection (5) of that section, for the words "the credit" there shall be substituted the words "any credit".
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(3) Sub-paragraph (1) above has effect in relation to value received (within the meaning of section 300 of that Act) on or after 6th April 1998.
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Value received by persons other than claimants |
| | 15. - (1) For subsections (1) to (2) of section 303 of the Taxes Act 1988 there shall be substituted the following subsections-
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"(1) Where, in the case of an issue of eligible shares in a company, any relief is attributable to any shares comprised in the issue which are held by an individual, subsection (1A) below shall apply if at any time in the seven year period the company or any subsidiary-
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(a) repays, redeems or repurchases any of its share capital which belongs to any member other than that individual or a person who falls within subsection (1B) below, or |
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(b) makes any payment to any such member for giving up his right to any of the share capital of the company or subsidiary on its cancellation or extinguishment. |
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(1A) The relief-
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(a) if it is greater than the amount mentioned in subsection (1C) below, shall be reduced by that amount, and |
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(b) if paragraph (a) above does not apply, shall be withdrawn. |
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(1B) A person falls within this sub-paragraph if the repayment, redemption, repurchase or payment in question-
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(a) causes any relief attributable to his shares in the company to be withdrawn or reduced by virtue of section 299 or 300(2)(a), or |
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(b) gives rise to a qualifying chargeable event (within the meaning of paragraph 14(4) of Schedule 5B to the 1992 Act) in respect of him. |
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(1C) The amount referred to in subsection (1A) above is an amount equal to tax at the lower rate for the year of assessment for which the relief was given-
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(a) where subsection (1) above does not apply in the case of any other individual, on the amount receivable by the member; |
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(b) where that subsection also applies in the case of one or more other individuals, on the appropriate fraction of that amount; |
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and subsection (4) of section 299 applies for the purposes of this subsection as it applies for the purposes of subsection (2) of that section.
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(1D) In subsection (1C) above "the appropriate fraction" is-
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A ÷ B |
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where-
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A = the amount subscribed by the individual for eligible shares which are comprised in the issue and to which relief is or, but for subsection (1A)(b) above, would be attributable; |
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B = the aggregate of that amount and the amount or amounts subscribed by the other individual or individuals for such shares. |
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(2) Where the repayment, redemption, repurchase or payment mentioned in subsection (1) above falls within the seven year periods for two or more issues of eligible shares in the company, subsection (1A) above shall have effect in relation to each of those issues as if the amount receivable by the member were reduced by multiplying it by the fraction-
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C ÷ D |
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where-
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C = the amount subscribed by individuals for eligible shares which are comprised in the issue and to which relief is or, but for subsection (1A)(b) above, would be attributable; |
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D = the aggregate of that amount and the corresponding amount or amounts for the other issue or issues." |
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(2) In subsection (3) of that section, for the words "the relevant period" there shall be substituted the words "the seven year period".
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(3) For subsection (9A) of that section there shall be substituted the following subsection-
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"(9A) References in this section to a subsidiary of a company are references to a company which at any time in the relevant period is a 51 per cent subsidiary of the first mentioned company, whether or not it is such a subsidiary at the time of the repayment, redemption, repurchase or payment in question or, as the case may be, the receipt of value in question."
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Husband and wife |
| | 16. - (1) After subsection (3) of section 304 of the Taxes Act 1988 there shall be inserted the following subsection-
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"(4) Subsections (6) to (6D) of section 299 shall apply for the purposes of this section as they apply for the purposes of that section."
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(2) This paragraph has effect in relation to disposals made on or after 6th April 1998.
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