|
| |
| |
Scope of tax advantages | |
489 Operation of tax advantages in connection with approved SIP | |
(1) Sections 490 to 499 apply for income tax purposes in connection with shares | |
awarded under an approved SIP. | |
(2) But those sections do not apply to an individual if, at the time of the award of | 5 |
shares in question, the earnings from the eligible employment are not (or | |
would not be if there were any) general earnings to which any of the charging | |
provisions of Chapter 4 or 5 of Part 2 apply. | |
(3) “The eligible employment” means the employment which results in the | |
individual meeting the employment requirement in relation to the plan. | 10 |
Tax advantages connected with award of shares | |
490 No charge on award or acquisition of shares: general | |
(1) This section applies— | |
(a) on the award to an employee of free, matching or partnership shares | |
under the plan, or | 15 |
(b) on the acquisition on behalf of an employee of dividend shares under | |
the plan. | |
(2) The employee is not liable to income tax on the value of the beneficial interest | |
in the shares that passes to the employee at the time of the award or acquisition. | |
491 No charge on award of shares as taxable benefit | 20 |
An employee is not liable to income tax by virtue of Chapter 8 of Part 3 (taxable | |
benefits: acquisitions of shares) in respect of an award of shares to the | |
employee under the plan. | |
492 No charge on partnership share money deducted from salary | |
(1) An employee is not liable to income tax under Part 2 on any amount of the | 25 |
employee’s salary which is deducted as partnership share money under a | |
partnership share agreement. | |
(2) But the deduction of partnership share money is to be disregarded for the | |
purpose of ascertaining— | |
(a) the amount of the employee’s remuneration for the purposes of | 30 |
Chapter 1 of Part 14 of ICTA (retirement benefit schemes), or | |
(b) the amount of the employee’s relevant earnings for the purposes of | |
Chapter 3 or 4 of that Part of that Act (retirement annuities or personal | |
pension schemes). | |
493 No charge on acquisition of dividend shares | 35 |
(1) A participant is not liable to income tax on the amount applied by the trustees | |
in acquiring dividend shares on behalf of the participant. | |
(2) The participant has no entitlement to a tax credit in respect of the amount so | |
applied. | |
| |
| |
|
| |
| |
(3) Section 234A(4) of ICTA (information relating to distributions to be provided | |
by nominee) does not apply to any amount applied by the trustees in acquiring | |
dividend shares on behalf of a participant. | |
(4) Subsections (1) and (2) do not affect— | |
(a) any charge under section 68B(2) or 251C(1) of ICTA (charge under Case | 5 |
V of Schedule D or Schedule F on dividend shares ceasing to be subject | |
to plan), or | |
(b) any entitlement to a tax credit in respect of the amount so charged. | |
(5) Subsection (3) is subject to paragraph 80(4)(c) of Schedule 2 (information | |
required where dividend shares cease to be subject to plan). | 10 |
Tax advantages connected with holding of shares | |
494 No charge on removal of restrictions applying to shares | |
(1) Subsection (2) applies where a participant’s plan shares are subject to a | |
provision for forfeiture in accordance with paragraph 32(1) of Schedule 2 | |
(permitted restrictions: provision for forfeiture). | 15 |
(2) The participant is not liable to income tax by virtue of— | |
(a) section 427 (charge on interest in shares ceasing to be only conditional | |
or on disposal), or | |
(b) section 449 (charge on removal of restriction applying to shares), | |
when the provision for forfeiture is varied or removed. | 20 |
(3) A participant is also not liable to income tax by virtue of section 449 if the event | |
which, under section 450, is a chargeable event for the purposes of that section | |
is the ending of the holding period in relation to free, matching or dividend | |
shares held by the participant. | |
495 No charge on increase in value of shares in dependent subsidiary | 25 |
(1) A participant is not liable to income tax by virtue of section 453 (charge on | |
increase in value of shares of dependent subsidiary) in respect of any of the | |
participant’s shares that are subject to the plan at or immediately before the | |
appropriate time. | |
(2) “The appropriate time” means the time by reference to which a chargeable | 30 |
increase is determined for the purposes of that section (see section 454(3) or | |
(5)). | |
496 No charge on cash dividend retained for reinvestment | |
(1) A participant is not liable to income tax in respect of an amount retained under | |
paragraph 68(2) of Schedule 2 (amount of cash dividend not reinvested). | 35 |
(2) The participant has no entitlement to a tax credit in respect of an amount so | |
retained. | |
(3) This section does not affect any charge under— | |
(a) section 68B(1) or 251B(1) of ICTA (charge under Case V of Schedule D | |
or Schedule F where cash dividend retained and then later paid out), or | 40 |
| |
| |
|
| |
| |
(b) section 68B(2) or 251C(1) of ICTA (charge under Case V of Schedule D | |
or Schedule F on dividend shares ceasing to be subject to plan), | |
or affect any tax credit in respect of an amount so charged. | |
Tax advantages connected with shares ceasing to be subject to plan | |
497 Limitations on charges on shares ceasing to be subject to plan | 5 |
(1) No liability to income tax arises on free or matching shares ceasing to be subject | |
to the plan, except as provided by— | |
(a) section 505 (charge on free or matching shares ceasing to be subject to | |
plan), or | |
(b) section 507 (charge on disposal of beneficial interest during holding | 10 |
period). | |
(2) No liability to income tax arises on partnership shares ceasing to be subject to | |
the plan, except as provided by section 506 (charge on partnership shares | |
ceasing to be subject to plan). | |
(3) No liability to income tax arises on dividend shares ceasing to be subject to the | 15 |
plan, except as provided by section 68B(2) or 251C(1) of ICTA (charge under | |
Case V of Schedule D or Schedule F on dividend shares ceasing to be subject to | |
plan). | |
498 No charge on shares ceasing to be subject to plan in certain circumstances | |
(1) A participant is not liable to income tax on shares ceasing to be subject to the | 20 |
plan if— | |
(a) they cease to be so subject on the participant ceasing to be in relevant | |
employment, and | |
(b) subsection (2) applies. | |
(2) This subsection applies if the participant ceases to be in relevant | 25 |
employment— | |
(a) because of injury or disability, | |
(b) on being dismissed by reason of redundancy, | |
(c) by reason of a transfer to which the Transfer of Undertakings | |
(Protection of Employment) Regulations 1981 (S.I. 1981/1794) apply, | 30 |
(d) if the relevant employment is employment by an associated company | |
(see paragraph 95(2) of Schedule 2), by reason of a change of control or | |
other circumstances ending that company’s status as an associated | |
company, | |
(e) by reason of the participant’s retirement on or after reaching the | 35 |
specified retirement age (see paragraph 98 of Schedule 2), or | |
(f) on the participant’s death. | |
Tax advantages: supplementary | |
499 No charge in respect of incidental expenditure | |
An employee is not liable to income tax in respect of incidental expenditure | 40 |
of— | |
(a) the trustees, | |
| |
| |
|
| |
| |
(b) the company which established the plan, or | |
(c) (if different) the employer, | |
in operating the plan. | |
Scope of tax charges | |
500 Operation of tax charges in connection with approved SIP | 5 |
(1) Sections 501 to 508 apply for income tax purposes in connection with shares | |
awarded under an approved SIP. | |
(2) But those sections do not apply to an individual if, at the time of the award of | |
shares in question, the earnings from the eligible employment are not (or | |
would not be if there were any) general earnings to which any of the charging | 10 |
provisions of Chapter 4 or 5 of Part 2 apply. | |
(3) “The eligible employment” means the employment which results in the | |
individual meeting the employment requirement in relation to the plan. | |
Charges connected with holding of shares | |
501 Charge on capital receipts in respect of plan shares | 15 |
(1) This section applies if conditions A and B are met. | |
(2) Condition A is that a capital receipt is received by a participant in respect of, or | |
by reference to, any of the participant’s plan shares. | |
(3) Condition B is that the plan shares in respect of, or by reference to, which the | |
capital receipt is received are— | 20 |
(a) free, matching or partnership shares that were awarded to the | |
participant less than 5 years before the participant received the capital | |
receipt, or | |
(b) dividend shares that were acquired on behalf of the participant less | |
than 3 years before the participant received the capital receipt. | 25 |
(4) If this section applies, the amount or value of the capital receipt counts as | |
employment income of the participant for the relevant tax year. | |
(5) The “relevant tax year” is the tax year in which the participant receives the | |
capital receipt. | |
(6) This section does not apply if the capital receipt is received by the participant’s | 30 |
personal representatives after the death of the participant. | |
(7) Section 502 explains what is meant by a “capital receipt”. | |
502 Meaning of “capital receipt” in section 501 | |
(1) This section applies for determining whether any money or money’s worth is | |
a “capital receipt” for the purposes of section 501. | 35 |
(2) The general rule is that any money or money’s worth is a “capital receipt” for | |
the purposes of section 501. | |
(3) The general rule is subject to the following exceptions. | |
| |
| |
|
| |
| |
(4) Money or money’s worth is not a capital receipt for the purposes of section 501 | |
to the extent that— | |
(a) it constitutes income in the hands of the recipient for the purposes of | |
income tax or would do so but for sections 489 to 498 (SIPs: tax | |
advantages), | 5 |
(b) it consists of the proceeds of disposal of the plan shares mentioned in | |
section 501, or | |
(c) it consists of new shares within the meaning of paragraph 87 of | |
Schedule 2 (company reconstructions). | |
(5) If, as a result of a direction given by or on behalf of the participant for the | 10 |
purposes of paragraph 77 of Schedule 2 (power of trustees to raise funds to | |
subscribe for rights issues), the trustees— | |
(a) dispose of some of the rights under a rights issue, and | |
(b) use the proceeds of that disposal to exercise other such rights, | |
the money or money’s worth constituting the proceeds of that disposal is not a | 15 |
capital receipt for the purposes of section 501. | |
503 Charge on partnership share money paid over to employee | |
(1) Any amount paid over to an individual under any of the provisions of | |
Schedule 2 mentioned in subsection (2) counts as employment income of the | |
individual for the relevant tax year. | 20 |
(2) The provisions are— | |
paragraph 46(5) (deductions in excess of permitted maximum amount), | |
paragraph 50(5)(b) or paragraph 52(6)(b) (surplus partnership share | |
money remaining after acquisition of shares), | |
paragraph 52(7) (partnership share money paid over on individual | 25 |
ceasing to be in relevant employment), | |
paragraph 52(8) (partnership share money paid over where accumulation | |
period brought to an end by event specified in plan), | |
paragraph 55(3) (partnership share money paid over on withdrawal from | |
partnership share agreement), or | 30 |
paragraph 56 (partnership share money paid over on withdrawal of plan | |
approval or termination of plan). | |
(3) The “relevant tax year” is the tax year in which the amount is paid over. | |
504 Charge on cancellation payments in respect of partnership share agreement | |
(1) This section applies if an individual who has entered into a partnership share | 35 |
agreement receives any money or money’s worth in respect of the cancellation | |
of the agreement. | |
(2) The amount of the money or the value of the money’s worth counts as | |
employment income of the individual for the relevant tax year. | |
(3) The “relevant tax year” is the tax year in which the individual receives the | 40 |
money or money’s worth. | |
| |
| |
|
