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Meaning of shares being withdrawn from or ceasing to be subject to plan |
| | 122. - (1) For the purposes of this Schedule shares are withdrawn from the plan when-
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(a) they are transferred by the trustees to the participant, or another person, on the direction of the participant, |
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(b) the participant assigns, charges or otherwise disposes of his beneficial interest in the shares, or |
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(c) they are disposed of by the trustees, on the direction of the participant, in circumstances where the trustees account (or hold themselves ready to account) for the proceeds to the participant or to another person. |
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(2) Where the participant has died, the references in sub-paragraph (1) to the participant shall be read as references to his personal representatives.
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(3) For the purposes of this Schedule plan shares cease to be subject to the plan when-
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(a) they are withdrawn from the plan, |
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(b) the participant to whom the shares were awarded ceases to be in relevant employment at a time when the shares are subject to the plan, or |
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(c) the trustees dispose of the shares under provision made in accordance with paragraph 73 (meeting PAYE obligations). |
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(4) Where an individual participates in an award of partnership shares, if he ceases to be in relevant employment at any time during the acquisition period relating to that award, he shall be treated for the purposes of sub-paragraphs (3) and (7) as ceasing to be in such employment immediately after the shares are awarded to him.
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(5) In sub-paragraph (4) "the acquisition period" in relation to an award means-
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(a) where there was no accumulation period, the period beginning with the deduction of the partnership share money and ending with the acquisition date (within the meaning of paragraph 40(2)); and |
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(b) where there was an accumulation period, the period beginning with the end of that period and ending immediately before the acquisition date (within the meaning of paragraph 42(3)). |
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(6) For the purposes of determining the charge to income tax (if any) arising on any of the participant's shares ceasing to be subject to the plan-
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(a) shares shall be taken to cease to be subject to the plan in the order in which they were awarded to the participant under the plan, |
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(b) where shares are awarded to the participant on the same day, the shares shall be treated as ceasing to be subject to the plan in the order which gives rise to the lowest charge to income tax on the participant. |
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(7) Where a participant ceases to be in relevant employment his plan shares shall be treated as ceasing to be subject to the plan on the date of leaving.
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Meaning of participant ceasing to be in relevant employment |
| | 123. - (1) This paragraph explains what is meant by a participant ceasing to be in relevant employment.
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(2) Relevant employment means employment by the company or any associated company.
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(3) A participant does not cease to be in relevant employment if he remains in the employment of the company or any associated company.
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Exercise of functions conferred on "the Inland Revenue" |
| | 124. References in this Schedule to "the Inland Revenue" are to any officer of the Board.
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Determination of market value |
| | 125. - (1) For the purposes of this Schedule the "market value" of shares has the same meaning as, for the purposes of the Taxation of Chargeable Gains Act 1992, it has by virtue of Part VIII of that Act.
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This is subject to paragraph 24(3) (determination of value of shares subject to restriction or risk of forfeiture).
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(2) Where for the purposes of this Schedule the market value of shares on any date falls to be determined, the Inland Revenue and the trustees may agree that it shall be determined by reference to such date or dates, or to an average of the values on a number of dates, as may be provided in the agreement.
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Meaning of "associated company" |
| | 126. - (1) For the purposes of this Schedule one company is an "associated company" of another company if-
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(a) one has control of the other, or |
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(b) both are under the control of the same person or persons. |
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(2) For the purposes of this paragraph the question of whether a person controls a company shall be determined in accordance with section 416(2) to (6) of the Taxes Act 1988.
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(3) This paragraph is subject to paragraph 67(3).
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Jointly owned companies |
| | 127. - (1) For the purposes of the provisions of this Schedule relating to group plans, each joint owner of a jointly owned company is treated as controlling-
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(a) the jointly owned company, and |
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(b) any company controlled by that company. |
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This paragraph does not apply for the purposes of paragraph 61(b) (requirement that plan shares are in a company not under another company's control).
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(2) A "jointly owned company" means a company-
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(a) of which 50% of the issued share capital is owned by one person and 50% by another, and |
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(b) which is not controlled by any one person. |
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(3) A jointly owned company may not be a participating company in more than one group plan.
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Meaning of "workers' co-operative" |
| | 128. - (1) In this Schedule "workers' co-operative" means a registered industrial and provident society which is a co-operative society and the rules of which include provisions which secure-
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(a) that the only persons who may be members of it are those who are employed by, or by a subsidiary of, the society and those who are the trustees of its employee share ownership plan, and |
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(b) that, subject to any provision about qualifications for membership which is from time to time made by the members of the society by reference to age, length of service or other factors of any description, all such persons may be members of the society. |
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(2) In sub-paragraph (1)-
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"registered industrial and provident society" means a society registered or deemed to be registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969; and |
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"co-operative society" has the same meaning as in section 1 of the 1965 Act or, as the case may be, the 1969 Act. |
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Meaning of "readily convertible asset" |
| | 129. - (1) For the purposes of this Schedule "readily convertible asset" has the same meaning as in section 203F of the Taxes Act 1988 (PAYE: tradeable assets).
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This is subject to sub-paragraph (2).
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(2) In determining for the purposes of this Schedule whether shares are readily convertible assets any market for the shares that-
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(a) is created by virtue of the trustees acquiring shares for the purposes of the plan, and |
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(b) exists solely for the purposes of the plan, |
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shall be disregarded.
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Minor definitions |
| | 130. - (1) In this Schedule-
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"approved employee share ownership plan" means an employee share ownership plan approved under this Schedule; |
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"approved profit sharing scheme" means a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988; |
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"articles of association", in relation to a company, includes any other written agreement between the shareholders of the company; |
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"company" means a body corporate; |
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"control", unless otherwise indicated, has the same meaning as in section 840 of the Taxes Act 1988; |
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"foreign cash dividend" means a cash dividend paid in respect of plan shares in a company not resident in the United Kingdom; |
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"group of companies" means a company and any other companies of which it has control, and "group company" has a corresponding meaning; |
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"ordinary share capital" has the meaning given in section 832(1) of the Taxes Act 1988; |
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"participant's plan shares", in relation to an employee share ownership plan, means plan shares that have been awarded to an individual participant; |
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"PAYE obligations" means obligations of any person under- |
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(a) sections 203 to 203L of the Taxes Act 1988, or
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(b) regulations under section 203 of that Act;
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"plan shares", in relation to a plan, means- |
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(a) free, partnership or matching shares that have been awarded to participants under the plan,
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(b) dividend shares that have been acquired on behalf of participants under the plan, and
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(c) shares in relation to which paragraph 115(5) applies (company reconstructions: new shares)),
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that remain subject to the plan; |
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"qualifying corporate bond" has the meaning given by section 117 of the Taxation of Chargeable Gains Act 1992; |
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"tax year" means a year of assessment. |
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(2) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule.
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(3) For the purposes of this Schedule references to "shares" include fractions of shares forming part of the share capital of a company registered in a foreign country the law of which recognises such fractions.
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(4) For the purposes of this Schedule a company is a member of a consortium owning another company if it is one of a number of companies-
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(a) which between them beneficially own not less than three-quarters of the other company's ordinary share capital, and |
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(b) each of which beneficially owns not less than one-twentieth of that capital. |
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Index of defined expressions |
| | 131. In this Schedule the following expressions are defined or otherwise explained by the provisions indicated-
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approved employee share ownership plan |
paragraph 130(1) (and see paragraph 118(7)) |
approved profit sharing scheme |
paragraph 130(1) |
articles of association |
paragraph 130(1) |
associated company |
paragraph 126 (and see paragraph 67(3)) |
award of shares |
paragraph 3(1) |
ceasing to be in relevant employment (in relation to a participant) |
paragraph 123 |
ceasing to be subject to plan (in relation to shares) |
paragraph 122 |
company |
paragraph 130(1) |
the company (in relation to an employee share ownership plan) |
paragraph 1(4) |
connected person |
paragraph 130(2) |
consortium (member of) |
paragraph 130(4) |
control |
paragraph 130(1) (and see paragraph 127) |
deduction (in Part XII) |
paragraph 105 |
dividend shares |
paragraph 53(1) |
eligible shares (in Part VIII) |
paragraph 59 |
employee share ownership plan |
paragraph 1(1) |
foreign cash dividend |
paragraph 130(1) |
forfeiture (provision for) |
paragraph 65(6) |
free shares |
paragraph 1(1)(a) |
group of companies |
paragraph 130(1) |
group plan |
paragraph 2(1) |
holding period |
paragraph 31 |
the Inland Revenue |
paragraph 124 |
market value (of shares) |
paragraph 125 |
matching shares |
paragraph 1(2) |
ordinary share capital |
paragraph 130(1) |
parent company |
paragraph 2(1) |
participant (in relation to an employee share ownership plan) |
paragraph 3(3) |
participant's plan shares |
paragraph 130(1) (and see paragraph 115(4)) |
participating company (in relation to a group plan) |
paragraph 2(2) |
participation in an award of shares |
paragraph 3(2) |
partnership share agreement |
paragraph 34 |
partnership shares |
paragraph 1(1)(b) |
PAYE obligations |
paragraph 130(1) |
performance allowance |
paragraph 25 |
plan shares |
paragraph 130(1) (and see paragraphs 115 and 116) |
the plan trust |
paragraph 68(2) |
qualifying corporate bond |
paragraph 130(1) |
qualifying employee |
paragraph 8(4) |
readily convertible asset |
paragraph 129 |
reinvestment (in Part VII) |
paragraph 53(1) |
relevant employment |
paragraph 123(2) |
salary (in Part V) |
paragraph 48 |
shares |
paragraph 130(3) (and in the context of a new holding paragraph 115(8)) |
tax year |
paragraph 130(1) |
the trustees |
paragraph 68(1) |
withdrawal of shares from plan |
paragraph 122(1) |
workers' co-operative |
paragraph 128 |
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