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443 Amount or value of consideration given for right to acquire shares | |
(1) This section applies for the purposes of section 442(3) in determining the | |
amount or value of any consideration given for a right to acquire shares. | |
(2) Subsection (3) applies if the right to acquire shares (“the new option”) is the | |
whole or part of the consideration for the assignment or release of another right | 5 |
to acquire shares (“the old option”). | |
(3) The amount or value of the consideration given for the new option is to be | |
treated as being the sum of— | |
(a) the amount by which the amount or value of the consideration given | |
for the grant of the old option exceeds the amount or value of any | 10 |
consideration for the assignment or release of the old option, apart from | |
the new option, and | |
(b) any valuable consideration given for the grant of the new option, apart | |
from the old option. | |
(4) Two or more transactions are to be treated for the purposes of subsection (2) as | 15 |
a single transaction by which a right to acquire shares is assigned for a | |
consideration which consists of or includes another right to acquire shares if— | |
(a) the transactions result in— | |
(i) a person ceasing to hold a right to acquire shares, and | |
(ii) that person or a connected person coming to hold another right | 20 |
to acquire shares, and | |
(b) one or more of the transactions is effected under arrangements to which | |
two or more persons who hold rights to acquire shares, in respect of | |
which there may be liability to tax under Chapter 5 of this Part (share | |
options), are parties. | 25 |
(5) Subsection (4) applies regardless of the order in which the assignment and the | |
acquisition occur. | |
(6) In this section “release” includes agreeing to the restriction of the exercise of the | |
right. | |
444 Conversion in consequence of employee’s death | 30 |
(1) Subsection (2) applies if— | |
(a) the employee dies holding an interest in convertible shares, | |
(b) those shares are converted into shares of a different class either on, or | |
within 12 months after, the death, and | |
(c) the conversion takes place wholly or partly as a consequence of the | 35 |
death. | |
(2) This Chapter applies as if the conversion had taken place immediately before | |
the death and had been in pursuance of an entitlement to convert conferred on | |
the deceased. | |
445 Duty to notify on conversions of shares | 40 |
(1) Subsection (2) applies if— | |
(a) a person has provided an individual with convertible shares in a | |
company, or an interest in such shares, | |
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(b) those shares are subsequently converted into shares of a different class, | |
and | |
(c) the circumstances are such that the conversion results or may result in | |
an amount counting as employment income of that individual under | |
section 438 (charge on conversion of shares). | 5 |
(2) Each of the following persons— | |
(a) the person who provided the shares or interest, and | |
(b) the employer company, | |
must provide the Inland Revenue with particulars in writing of the shares and | |
their conversion. | 10 |
(3) The particulars must be provided before 7th July in the tax year following that | |
in which the conversion takes place. | |
446 Minor definitions | |
(1) In this Chapter— | |
“director”— | 15 |
(a) in the case of a company whose affairs are managed by a board | |
of directors or similar body, means a member of that board or | |
similar body, | |
(b) in the case of a company whose affairs are managed by a single | |
director or similar person, means that director or person, | 20 |
(c) in the case of a company whose affairs are managed by its | |
members, means a member, | |
and includes any person who is to be or has been a director; | |
“employee” includes— | |
(a) in relation to a company, a person taking part in the | 25 |
management of the affairs of the company who is not a director, | |
and | |
(b) a person who is to be or has been an employee; | |
“shares” (except in section 436 in the expression “an interest in shares | |
which is only conditional”) includes stock and any other interest of a | 30 |
member of a company; | |
“terms” on which a person holds shares or an interest in shares means | |
terms imposed by contract or arrangement or in any other way. | |
(2) In this Chapter— | |
“the employee”, | 35 |
“the employer company”, and | |
“the shares”, | |
have the meaning indicated in section 435(1) and (4). | |
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Chapter 4 | |
Post-acquisition benefits from shares | |
Introduction | |
447 Application of this Chapter | |
(1) This Chapter applies where a person (“the employee”)— | 5 |
(a) acquires shares or an interest in shares in a company, and | |
(b) does so as a director or employee of that or another company. | |
(2) In this Chapter (unless the context indicates a different meaning)— | |
“the acquisition” means the acquisition of shares or an interest in shares | |
mentioned in subsection (1)(a); | 10 |
“the shares” means the shares mentioned there; | |
and “director” and “employee” have the extended meaning given by section | |
470(1). | |
(3) The company as a director or employee of which the employee acquires the | |
shares or the interest in them is “the employer company” for the purposes of | 15 |
this Chapter. | |
(4) For the purposes of this Chapter a person (“E”) acquires shares or an interest in | |
shares “as a director or employee” of a company if E acquires the shares or | |
interest in pursuance of— | |
(a) a right conferred on, or an opportunity offered to, E by reason of E’s | 20 |
office as a director of, or E’s employment by, the company; or | |
(b) a right assigned to E after having been conferred on some other person | |
by reason of E’s office as a director of, or E’s employment by, the | |
company. | |
(5) In addition, if a person (“A”) acquires shares or an interest in shares in a | 25 |
company in pursuance of a right conferred on, or opportunity offered to, A as | |
a person connected with a director or employee of that or another company | |
(“the company”), the director or employee is to be treated for the purposes of | |
this Chapter— | |
(a) as acquiring the shares or interest “as a director or employee” of the | 30 |
company, and | |
(b) as holding any beneficial interest in the shares for the time being held | |
by A; | |
and subsections (1) to (3) apply accordingly. | |
(6) Section 463 provides for a person to be treated as continuing to have a | 35 |
beneficial interest in shares until there is a qualifying disposal for the purposes | |
of that section. | |
448 Cases where this Chapter does not apply | |
(1) This Chapter does not apply where a person has acquired shares or an interest | |
in shares as a director or employee of a company if the earnings from the office | 40 |
or employment in question were not (or would not have been if there had been | |
any) general earnings to which section 15 or 21 applies (earnings for year when | |
employee resident and ordinarily resident in the UK). | |
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(2) This Chapter does not apply where a person has acquired shares or an interest | |
in shares under the terms of an offer to the public. | |
(3) In a case within section 544(1) (exemption for priority share allocations where | |
offer to employees separate from public offer), any acquisition made under the | |
terms of either the public offer or the employee offer within the meaning of that | 5 |
section is to be treated for the purposes of this Chapter as made under the | |
terms of an offer to the public. | |
(4) Subsection (3) applies whether or not there is any benefit within section 544(2) | |
(benefit derived from entitlement to priority allocation exempt from income | |
tax). | 10 |
Tax charge where restrictions or rights varied | |
449 Charge on occurrence of chargeable event | |
(1) This section applies if a chargeable event occurs in relation to the shares at a | |
time when the employee has not ceased to have a beneficial interest in them. | |
(2) The taxable amount determined under section 451 counts as employment | 15 |
income of the employee for the relevant tax year. | |
(3) The “relevant tax year” is the tax year in which the chargeable event occurs. | |
(4) Section 450 explains what are chargeable events for the purposes of this | |
section. | |
(5) This section is subject to— | 20 |
section 452 (cases outside charge under this section), | |
section 494 (approved SIP: no charge on removal of restrictions), | |
section 520 (approved SAYE option scheme: no charge in respect of post- | |
acquisition benefits), and | |
section 525 (approved CSOP scheme: no charge in respect of post- | 25 |
acquisition benefits). | |
450 Chargeable events | |
(1) This section applies for the purposes of section 449 (charge on occurrence of | |
chargeable event). | |
(2) Unless excluded by subsection (4), any of the events mentioned in subsection | 30 |
(3) is a “chargeable event” in relation to shares in a company if it increases the | |
value of the shares or would do so but for the occurrence of some other event. | |
(3) The events are— | |
(a) the removal or variation of a restriction applying to the shares, | |
(b) the creation or variation of a right relating to the shares, | 35 |
(c) the imposition of a restriction applying to other shares in the company, | |
(d) the variation of a restriction applying to other shares in the company, | |
and | |
(e) the removal or variation of a right relating to other shares in the | |
company. | 40 |
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(4) An event within subsection (3) is not a “chargeable event” if the restriction or | |
right applies to all shares of the class concerned and any of the following | |
conditions is met at the time of the event— | |
(a) the company is employee-controlled because of holdings of shares of | |
the relevant class; | 5 |
(b) the majority of the company’s shares of the relevant class are held by | |
outside shareholders; | |
(c) the company is a 51% subsidiary with shares of a single class. | |
(5) “The relevant class” means the class of shares to which the shares belong. | |
(6) References in this section— | 10 |
(a) to restrictions to which shares are subject, or | |
(b) to rights relating to shares, | |
are references to such restrictions imposed or rights conferred by contract, | |
arrangement or in any other way. | |
451 Amount of charge | 15 |
(1) The taxable amount for the purposes of section 449 (charge on occurrence of | |
chargeable event) is— | |
(a) the amount by which the value of the shares is increased by the | |
chargeable event, or | |
(b) if that amount is affected by the occurrence of some other event, the | 20 |
amount by which that value would have been increased but for that | |
other event. | |
(2) If the interest of the employee is less than full beneficial ownership, the taxable | |
amount is an appropriate proportion of the amount mentioned in subsection | |
(1)(a) or (b). | 25 |
452 Cases outside charge under section 449 | |
(1) Section 449 (charge on occurrence of chargeable event) does not apply in the | |
following cases. | |
(2) Section 449 does not apply if, by virtue of section 427 (charge on interest | |
ceasing to be only conditional, etc.), an amount counts as employment income | 30 |
of the employee in respect of the chargeable event. | |
(3) Section 449 does not apply in relation to shares in a company if the employee | |
has not, at any time in the period of 7 years ending with the date on which the | |
chargeable event occurs, been a director or employee of— | |
(a) the employer company; | 35 |
(b) if different, the company whose shares they are; or | |
(c) an associated company of a company within paragraph (a) or (b). | |
(4) Section 449 does not apply in relation to shares in a company which— | |
(a) was a dependent subsidiary at the time of the acquisition, or | |
(b) is a dependent subsidiary immediately before the time of the | 40 |
chargeable event. | |
(5) But in such a case section 453 (charge on increase in value of shares in | |
dependent subsidiaries) may apply. | |
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