414 Reduction in other cases of foreign service
(1) This section applies if—
(a) the service of the employee or former employee in the employment in
respect of which the payment or other benefit is received includes
foreign service, and
(b) section 413 (exception in certain cases of foreign service) does not
(2) The taxable person may claim relief in the form of a proportionate reduction of
the amount that would otherwise count as employment income under this
(3) The proportion is that which the length of the foreign service bears to the whole
length of service in the employment before the date of the termination or
change in question.
(4) A person’s entitlement to relief under this section is limited as mentioned in
subsection (5) if the person is entitled—
(a) to deduct, retain or satisfy income tax out of a payment which the
person is liable to make, or
(b) to charge any income tax against another person.
(5) The relief must not reduce the amount of income tax for which the person is
liable below the amount the person is entitled so to deduct, retain, satisfy or
(6) In this section “foreign service” has the same meaning as in section 413(2).
General and supplementary provisions
415 Valuation of benefits
(1) In the case of a cash benefit, for the purposes of this Chapter the amount of a
payment or other benefit is taken to be the amount received.
(2) In the case of a non-cash benefit, for the purposes of this Chapter the amount
of a payment or other benefit is taken to be the greater of—
(a) the amount of earnings (as defined in Chapter 1 of Part 3) that the
benefit would give rise to if it were received by an employee within
section 15 for performance of the duties of an employment (money’s
(b) the cash equivalent of the benefit under the benefits code if it were so
received and the code applied to it.
(3) For the purposes of subsection (2), the benefits code has effect with the
modifications in subsections (4), (6) and (7).
(4) References in the benefits code to the employee are to be taken as references to
the taxable person and any other person by whom the benefit is received.
(5) For the purposes of subsection (4), section 401(4)(a) is to be disregarded.
(6) References in the benefits code to the employer are to be taken as including
references to the former employer.
(a) section 106 (cash equivalent: cost of accommodation over £75,000)
(b) the sum referred to in section 105(2)(b) (the sum made good) exceeds
the amount referred to in section 105(2)(a) (the rental value),
the amount to be subtracted under paragraph (b) of step 4 of the calculation in
section 106(2) is that excess (and not only the excess rent referred to there).
416 Notional interest treated as paid if amount charged for beneficial loan
(1) This section applies if an amount (“the taxable amount”) consisting of, or
including, an amount representing the benefit of a loan counts as a person’s
employment income in a tax year under section 403.
(2) That person is to be treated for the purposes of the Tax Acts (other than this
Chapter) as having paid interest on the loan in the tax year equal to the lesser
(a) the amount representing the cash equivalent of the loan, and
(b) the taxable amount.
(3) The interest is to be treated—
(a) as accruing during the period in the tax year when the loan is
(b) as paid at the end of the period.
(4) The interest is not to be treated—
(a) as income of the person making the loan, or
(b) as relevant loan interest to which section 369 of ICTA applies (mortgage
interest payable under deduction of tax).
Employment income: share-related income and exemptions
417 Scope of Part 7
(1) This Part contains special rules relating to directors or employees who
(a) shares in companies, or
(b) options relating to such shares,
in connection with their office or employment.
(2) The rules are contained in—
Chapter 2 (conditional interests in shares),
Chapter 3 (convertible shares),
Chapter 4 (post-acquisition benefits from shares),
Chapter 5 (share options),
Chapter 6 (approved share incentive plans),
Chapter 7 (approved SAYE option schemes),
Chapter 8 (approved CSOP schemes),
Chapter 9 (enterprise management incentives), and
Chapter 10 (priority share allocations).
(3) The following make provision for amounts to count as employment income of
directors or employees—
Chapters 2 to 6, and
(4) The following make provision for exemptions and reliefs from income tax—
Chapter 2, and
Chapters 5 to 10.
(5) Chapter 11 contains supplementary provisions relating to employee benefit
418 Other provisions about share-related income and exemptions
(1) The following provisions of this Act also deal with share-related income and
Chapter 8 of Part 3 (taxable benefits: notional loans in respect of
acquisitions of shares),
Chapter 9 of Part 3 (taxable benefits: disposals of shares for more than
market value), and
Part 7 of Schedule 7 (transitional provisions relating to share-related
(2) In addition, share-related income may fall within—
(a) Chapter 1 of Part 3 (earnings), or
(b) Chapter 10 of Part 3 (taxable benefits: residual liability to charge).
(3) In view of section 49 of FA 2000 (phasing out of APS schemes) the following
are not rewritten in this Act and continue in force unaffected by the repeals
made by this Act—
section 186 of ICTA (APS schemes) and section 187 of that Act
(interpretation) so far as relating to APS schemes,
Schedule 9 to ICTA (approval of share schemes) so far as relating to APS
schemes and Schedule 10 to that Act (further provisions about APS
“APS schemes” means profit sharing schemes approved under Schedule 9 to
(4) Sections 138 to 140 of ICTA (share acquisitions by directors and employees)
continue to apply in relation to shares or interests in shares acquired before
26th October 1987 (see paragraph 57 of Schedule 7).
419 Duties to provide information
(1) The following contain duties to supply information about the acquisition of
shares or interests in shares by directors or employees—
section 432 (provision of conditional interest in shares),
section 465 (general duty to notify acquisition of shares or interests in
shares by employees or directors).
(2) The following contain duties to supply information about other matters that
may result in amounts counting as employment income of directors or
section 433 (events resulting in charge under section 427),
section 445 (conversion of shares),
section 466 (chargeable events and receipt of chargeable benefits).
(3) Section 486 contains a duty to provide information about the grant of share
options and other matters relating to them.
(4) Paragraph 52 of Schedule 5 (enterprise management incentives) contains a
duty to deliver annual returns where a company’s shares are subject to a
qualifying option within the meaning of that Schedule.
420 Negative amounts treated as nil
(1) This section applies if the result given by any formula under any provision of
this Part would otherwise be a negative amount.
(2) The result is to be taken to be nil instead.
421 Application of Part 7 to office-holders
(1) As indicated in section 417, this Part contains provisions relating to directors as
well as employees.
(2) But section 5(1) (application of employment income Parts to office-holders
generally) does not apply to any of the provisions of this Part.
(3) This is subject to section 549(5) (application of Chapter 11 of this Part).
Conditional interests in shares
422 Application of this Chapter
(1) This Chapter applies where—
(a) a person (“the employee”) acquires a beneficial interest in shares in a
company as a director or employee of that or another company, and
(b) the interest is acquired on terms that make it only conditional.
(2) In this Chapter —
“the employee’s interest” means the beneficial interest in shares
acquired by the employee as mentioned in subsection (1);
“the employer company” means the company as a director or employee of
which the employee’s interest is acquired;
“the shares” means the shares mentioned in subsection (1)(a),
and “director” and “employee” have the extended meaning given by section