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“approval”, in relation to an election, means approval by the Board of | |
Inland Revenue under paragraph 3B of Schedule 1 to the Contributions | |
and Benefits Act; and | |
“secondary contributor” has the same meaning as in that Act (see section | |
7). | 5 |
482 Deductible amount in respect of special contribution met by employee | |
(1) The amount of the liability referred to in subsection (4) is a deductible amount | |
for the purposes of section 478(1), if conditions A to D are met. | |
(2) Condition A is that a notice in respect of the share option was given to the | |
Board of Inland Revenue in accordance with section 1 of the Social Security | 10 |
Contributions (Share Options) Act 2001 (c. 20) before 11th August 2001. | |
(3) Condition B is that the person or one of the persons who gave that notice is a | |
person who (apart from that Act) was liable, or would have become liable, by | |
virtue of an election under paragraph 3B(1) of Schedule 1 to the Contributions | |
and Benefits Act, to pay secondary Class 1 contributions in respect of a gain | 15 |
arising on the exercise, assignment or release of the share option. | |
(4) Condition C is that that person became liable to pay a special contribution | |
under section 2 of the Social Security Contributions (Share Options) Act 2001 | |
in respect of the share option. | |
(5) Condition D is that that person met that liability before 11th August 2001 or | 20 |
before the end of such further period as the Board of Inland Revenue directed | |
under section 2(5) of that Act. | |
Supplementary provisions | |
483 Extended meaning of “assign” and “release” | |
(1) For the purposes of this Chapter, a person who receives a benefit in money or | 25 |
money’s worth in consideration for, or otherwise in connection with— | |
(a) failing or undertaking not to exercise a share option, or | |
(b) granting or undertaking to grant to another person a right to acquire | |
shares which are subject to a share option or any interest in them, | |
is to be treated as realising a gain by assigning or releasing the share option for | 30 |
a consideration equal to the amount or value of the benefit. | |
(2) References in this Chapter to the release of a share option include agreeing to | |
the restriction of the exercise of the option. | |
484 Amount or value of consideration given for grant of share option | |
(1) This section applies for the purposes of sections 479 and 480 (amount of gain) | 35 |
in determining the amount or value of any consideration given for the grant of | |
the share option. | |
(2) If any consideration is given partly in respect of the grant and partly in respect | |
of something else, the amount given in respect of the different things is to be | |
determined on a just and reasonable apportionment. | 40 |
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(3) The consideration given wholly or partly for the grant does not include the | |
performance of any duties of, or in connection with, the office or employment | |
by reason of which the share option was granted. | |
485 Application of this Chapter where share option exchanged for another | |
(1) This section applies if— | 5 |
(a) a share option (“the old option”) is assigned or released, and | |
(b) the whole or part of the consideration for the assignment or release | |
consists of or includes another share option (“the new option”). | |
(2) For the purposes of section 480 (amount of gain realised by assigning or | |
releasing option) the new option is not to be treated as consideration for the | 10 |
assignment or release of the old option. | |
(3) This Chapter applies to the new option as it applies to the old option. | |
(4) For the purposes of sections 479 and 480 (amount of gain) the amount or value | |
of the consideration for the grant of the new option is to be treated as being the | |
sum of— | 15 |
(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 | |
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 | 20 |
from the old option. | |
(5) Two or more transactions are to be treated for the purposes of subsection (1) as | |
a single transaction by which one share option is assigned for a consideration | |
which consists of or includes another share option if— | |
(a) the transactions result in— | 25 |
(i) a person ceasing to hold a share option, and | |
(ii) that person or a connected person coming to hold another share | |
option, and | |
(b) one or more of the transactions is effected under arrangements to which | |
two or more persons holding share options, in respect of which there | 30 |
may be liability to tax under this Chapter, are parties. | |
(6) Subsection (5) applies regardless of the order in which the assignment and the | |
acquisition occur. | |
486 Duty to notify matters relating to share options | |
(1) Subsection (2) applies if in a tax year a company— | 35 |
(a) grants a share option, | |
(b) allots or transfers shares on the exercise of a share option, | |
(c) receives notice of the assignment of a share option, or | |
(d) provides a benefit in money or money’s worth— | |
(i) for the assignment of a share option, | 40 |
(ii) for the release in whole or in part of a share option, | |
(iii) for or in connection with a failure, or undertaking not, to | |
exercise a share option, or | |
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(iv) for or in connection with the grant of, or an undertaking to | |
grant, a right to acquire shares or an interest in shares to which | |
a share option relates. | |
(2) The company must provide the Inland Revenue with particulars in writing of | |
the matter. | 5 |
(3) The particulars must be provided before 7th July in the tax year following that | |
in which the matter occurred. | |
(4) The particulars of any matter must include particulars of any secondary Class | |
1 contributions payable in connection with the matter which are— | |
(a) recovered as mentioned in section 481(2)(a) (agreement for secondary | 10 |
contributor to recover secondary Class 1 contributions in respect of | |
gain from the employee), or | |
(b) met as mentioned in section 481(3) (liability for secondary Class 1 | |
contributions in respect of gain transferred to the employee). | |
(5) A company need not deliver particulars under subsection (1) if it has already | 15 |
given them in a notice under paragraph 44 of Schedule 5 (EMIs: notice of | |
option to be given to Inland Revenue). | |
In other respects the obligations imposed by subsection (1) and by that | |
paragraph are independent of each other. | |
487 Minor definitions | 20 |
(1) In this Chapter— | |
“company” means a body corporate; | |
“director”— | |
(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 | 25 |
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, | |
(c) in the case of a company whose affairs are managed by its | |
members, means a member, | 30 |
and includes a person who is to be or has been a director; | |
“employee” includes— | |
(a) in relation to a company, a person taking part in the | |
management of the affairs of the company who is not a director, | |
and | 35 |
(b) a person who is to be or has been an employee; | |
“secondary Class 1 contributions” has the same meaning as in the | |
Contributions and Benefits Act (see section 1); | |
“shares” includes— | |
(a) stock, and | 40 |
(b) any securities as defined in section 254(1) of ICTA issued by a | |
company; | |
“the Contributions and Benefits Act” means SSCBA 1992 or SSCB(NI)A | |
1992. | |
(2) In this Chapter— | 45 |
“share option”, | |
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“the employee”, and | |
“the share option”, | |
have the meaning indicated in section 471(4). | |
Chapter 6 | |
Approved share incentive plans | 5 |
Introduction | |
488 Approved share incentive plans (SIPs) | |
(1) This Chapter provides— | |
(a) for the approval of share incentive plans (“SIPs”) by the Inland | |
Revenue, | 10 |
(b) for exemptions from income tax in connection with shares obtained | |
under those plans, | |
(c) for amounts to count as employment income in certain circumstances | |
in connection with such plans, and | |
(d) for the making of PAYE deductions in connection with such amounts. | 15 |
(2) Schedule 2 contains the requirements that have to be met for a SIP to be | |
approved, together with— | |
(a) the approval procedure, and | |
(b) provisions relating to the administration and operation of a SIP. | |
(3) The provisions of— | 20 |
(a) this and the following sections of this Chapter, | |
(b) Schedule 2, and | |
(c) the provisions mentioned in section 515 (tax advantages and charges | |
under other Acts), | |
together constitute “the SIP code”. | 25 |
(4) In the SIP code— | |
“approved” means approved by the Inland Revenue under Schedule 2, | |
and “approval” has a corresponding meaning; | |
“PAYE deduction” means a deduction required by PAYE regulations; | |
a “share incentive plan” (or “SIP” for short) means a plan established by a | 30 |
company providing— | |
(a) for shares to be appropriated to employees without payment | |
(“free shares”), or | |
(b) for shares to be acquired on behalf of employees out of sums | |
deducted from their salary (“partnership shares”); | 35 |
(5) Other expressions used in the SIP code and contained in the index at the end of | |
Schedule 2 have the meaning indicated by the index. | |
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