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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 | 5 |
(b) section 413 (exception in certain cases of foreign service) does not | |
apply. | |
(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 | |
Chapter. | 10 |
(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— | 15 |
(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 | 20 |
charge. | |
(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 | 25 |
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 | 30 |
section 15 for performance of the duties of an employment (money’s | |
worth), and | |
(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 | 35 |
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 | 40 |
references to the former employer. | |
(7) Where— | |
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(a) section 106 (cash equivalent: cost of accommodation over £75,000) | |
applies, and | |
(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 | 5 |
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. | 10 |
(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 | |
of— | |
(a) the amount representing the cash equivalent of the loan, and | |
(b) the taxable amount. | 15 |
(3) The interest is to be treated— | |
(a) as accruing during the period in the tax year when the loan is | |
outstanding, and | |
(b) as paid at the end of the period. | |
(4) The interest is not to be treated— | 20 |
(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). | |
Part 7 | |
Employment income: share-related income and exemptions | 25 |
Chapter 1 | |
Introduction | |
417 Scope of Part 7 | |
(1) This Part contains special rules relating to directors or employees who | |
acquire— | 30 |
(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), | 35 |
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), | 40 |
Chapter 8 (approved CSOP schemes), | |
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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 | 5 |
Chapter 8. | |
(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 | 10 |
trusts. | |
418 Other provisions about share-related income and exemptions | |
(1) The following provisions of this Act also deal with share-related income and | |
exemptions— | |
Chapter 8 of Part 3 (taxable benefits: notional loans in respect of | 15 |
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 | |
income). | 20 |
(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 | 25 |
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 | 30 |
schemes). | |
“APS schemes” means profit sharing schemes approved under Schedule 9 to | |
ICTA. | |
(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 | 35 |
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), | 40 |
section 465 (general duty to notify acquisition of shares or interests in | |
shares by employees or directors). | |
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(2) The following contain duties to supply information about other matters that | |
may result in amounts counting as employment income of directors or | |
employees— | |
section 433 (events resulting in charge under section 427), | |
section 445 (conversion of shares), | 5 |
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 | 10 |
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. | 15 |
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. | 20 |
(3) This is subject to section 549(5) (application of Chapter 11 of this Part). | |
Chapter 2 | |
Conditional interests in shares | |
Introduction | |
422 Application of this Chapter | 25 |
(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 — | 30 |
“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), | 35 |
and “director” and “employee” have the extended meaning given by section | |
434(1). | |
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