|
| |
| |
Charges connected with shares ceasing to be subject to plan | |
505 Charge on free or matching shares ceasing to be subject to plan | |
(1) When free or matching shares cease to be subject to the plan, there may be an | |
amount that counts as employment income of the participant depending on the | |
period that has elapsed between— | 5 |
(a) the date when the shares were awarded to the participant (“the award | |
date”), and | |
(b) the date when they cease to be subject to the plan (“the exit date”). | |
(2) If the period is less than 3 years, the market value of the shares at the exit date | |
counts as employment income of the participant for the relevant tax year (see | 10 |
subsection (5)). | |
(3) If the period is 3 years or more but less than 5 years, whichever is the lesser of— | |
(a) the market value of the shares at the award date, and | |
(b) the market value of the shares at the exit date, | |
counts as employment income of the participant for the relevant tax year (see | 15 |
subsection (5)). | |
(4) Where— | |
(a) subsection (3) applies, and | |
(b) the applicable amount is the market value of the shares at the award | |
date, | 20 |
the tax due is reduced by the amount or aggregate amount of any tax paid by | |
virtue of section 501 (charge on capital receipts in respect of plan shares) on any | |
capital receipts in respect of the shares. | |
(5) The “relevant tax year” is the tax year in which the exit date falls. | |
(6) No liability to tax arises by virtue of this section— | 25 |
(a) on the forfeiture of free or matching shares, | |
(b) if section 498 (no charge on shares ceasing to be subject to plan in | |
certain circumstances) applies, or | |
(c) if section 507 (charge on disposal of beneficial interest in holding | |
period) applies. | 30 |
506 Charge on partnership shares ceasing to be subject to plan | |
(1) When partnership shares cease to be subject to the plan, there may be an | |
amount that counts as employment income of the participant depending on the | |
period that has elapsed between— | |
(a) the acquisition date in respect of those shares (as defined by paragraph | 35 |
50(4) or, as the case may be, paragraph 52(5) of Schedule 2), and | |
(b) the date when they cease to be subject to the plan (“the exit date”). | |
(2) If the period is less than 3 years, the market value of the shares at the exit date | |
counts as employment income of the participant for the relevant tax year (see | |
subsection (5)). | 40 |
(3) If the period is 3 years or more but less than 5 years, whichever is the lesser of— | |
(a) the amount of partnership share money used to acquire the shares, and | |
(b) the market value of the shares at the exit date, | |
| |
| |
|
| |
| |
counts as employment income of the participant for the relevant tax year (see | |
subsection (5)). | |
(4) Where— | |
(a) subsection (3) applies, and | |
(b) the applicable amount is the amount of partnership share money used | 5 |
to acquire the shares, | |
the tax due is reduced by the amount or aggregate amount of any tax paid by | |
virtue of section 501 (charge on capital receipts in respect of plan shares) on any | |
capital receipts in respect of the shares. | |
(5) The “relevant tax year” is the tax year in which the exit date falls. | 10 |
(6) No liability to income tax arises by virtue of this section if section 498 (no | |
charge on shares ceasing to be subject to plan in certain circumstances) applies. | |
507 Charge on disposal of beneficial interest during holding period | |
(1) This section applies if— | |
(a) free or matching shares cease to be subject to the plan at any time | 15 |
during the holding period for those shares, and | |
(b) this occurs as a result of the participant assigning, charging or | |
otherwise disposing of the participant’s beneficial interest in the shares | |
in breach of obligations under paragraph 36(1)(b) of Schedule 2 | |
(restrictions relating to disposals within holding period). | 20 |
(2) The market value of the shares at the date when they cease to be subject to the | |
plan counts as employment income of the participant for the relevant tax year. | |
(3) The “relevant tax year” is the tax year in which that date falls. | |
508 Identification of shares ceasing to be subject to plan | |
(1) For the purpose of determining any liability to tax arising by virtue of the SIP | 25 |
code in respect of any of a participant’s shares ceasing to be subject to the | |
plan— | |
(a) shares are to be taken as ceasing to be subject to the plan in the order in | |
which they were awarded to the participant under the plan, and | |
(b) where shares are awarded to the participant on the same day, the | 30 |
shares are to be treated as ceasing to be subject to the plan in the order | |
which gives rise to the lowest charge to income tax on the participant. | |
(2) For the purposes of subsection (1) dividend shares are “awarded” to a | |
participant when the trustees acquire them on behalf of, or appropriate them | |
to, the participant. | 35 |
PAYE | |
509 Modification of section 696 where charge on shares ceasing to be subject to | |
plan | |
(1) Where— | |
(a) as a result of shares ceasing to be subject to an approved SIP, there is an | 40 |
amount that counts as employment income of a participant by virtue of | |
the SIP code, and | |
| |
| |
|
| |
| |
(b) the shares are readily convertible assets, | |
section 696 (readily convertible assets) applies as follows. | |
(2) Section 696 applies as if the participant (“P”) were being provided with PAYE | |
income in the form of those shares— | |
(a) at the time when the shares cease to be subject to the plan, and | 5 |
(b) in respect of the relevant employment in which P is employed at that | |
time (or, if P is not then employed in relevant employment, the relevant | |
employment in which P was last employed before that time). | |
(3) In addition, subsection (2) of section 696 applies as if the reference in that | |
subsection to the amount of income likely to be PAYE income in respect of the | 10 |
provision of the asset were a reference to the amount which is likely to count | |
as employment income by virtue of the SIP code as a result of the shares | |
ceasing to be subject to the plan. | |
(4) In this section “readily convertible asset” has the same meaning as in section | |
696 (see sections 701 and 702), but this is subject to subsection (5). | 15 |
(5) In determining for the purposes of this section (and of section 696 in its | |
application in accordance with this section) whether the shares are readily | |
convertible shares, any market for the shares which— | |
(a) is created by virtue of the trustees acquiring shares for the purposes of | |
the plan, and | 20 |
(b) exists solely for the purposes of the plan, | |
is to be disregarded. | |
510 Payments by trustees to employer company on shares ceasing to be subject to | |
plan | |
(1) This section applies if, as a result of any shares (“the relevant shares”) ceasing | 25 |
to be subject to an approved SIP— | |
(a) there is an amount that counts as employment income of a participant | |
by virtue of the SIP code, and | |
(b) an obligation to make a PAYE deduction arises in respect of that | |
amount. | 30 |
(2) The trustees must pay to the employer company a sum which is sufficient to | |
enable the employer company to discharge that obligation. | |
(3) Subsection (2) is subject to— | |
(a) subsection (4), and | |
(b) section 511 (PAYE deductions to be made by trustees on shares ceasing | 35 |
to be subject to plan). | |
(4) Subsection (2) only applies if, or to the extent that, the plan does not require the | |
participant to pay the employer company a sum which is sufficient to | |
discharge the obligation mentioned in subsection (1)(b). | |
(5) Section 710(1) (notional payments: accounting for tax) has effect as if it | 40 |
required the deduction of income tax to be made from any sum or sums | |
received by the employer company— | |
(a) from the trustees under subsection (2), or | |
(b) from the participant in accordance with a requirement of the plan, as | |
mentioned in subsection (4). | 45 |
| |
| |
|
| |
| |
(6) After making the necessary PAYE deduction from the sum or sums received as | |
mentioned in subsection (5), the employer company must pay any remaining | |
amount to the participant. | |
(7) In this section “the employer company” means— | |
(a) the company which employs the participant in relevant employment at | 5 |
the time when the relevant shares cease to be subject to the plan, or | |
(b) if the participant is not then employed in relevant employment, the | |
company which last employed the participant in relevant employment | |
before that time, | |
so long as that company is one to which PAYE regulations apply at that time. | 10 |
511 PAYE deductions to be made by trustees on shares ceasing to be subject to | |
plan | |
(1) This section applies if, as a result of any shares ceasing to be subject to an | |
approved SIP— | |
(a) there is an amount that counts as employment income of a participant | 15 |
by virtue of the SIP code, and | |
(b) condition A or B is met. | |
(2) Condition A is that the Inland Revenue— | |
(a) are of the opinion that it is impracticable for the employer company | |
(within the meaning of section 510) to make a PAYE deduction, and | 20 |
(b) accordingly direct that this section is to apply. | |
(3) Condition B is that there is no company that qualifies as the employer company | |
(within the meaning of that section). | |
(4) If this section applies— | |
(a) section 510(2) does not apply, and | 25 |
(b) the trustees must make a PAYE deduction in respect of the taxable | |
equivalent as if the participant were a former employee of the trustees. | |
(5) The “taxable equivalent” means an amount equal to that mentioned in | |
subsection (1). | |
(6) If this section applies, section 689 (employee of non-UK employer) does not | 30 |
apply. | |
512 Disposal of beneficial interest by participant | |
(1) This section applies if— | |
(a) a participant (“P”) disposes of P’s beneficial interest in any of P’s plan | |
shares to the trustees, and | 35 |
(b) the trustees are, as a result of paragraph 6 of Schedule 7D to TCGA | |
(deemed disposal by trustees on disposal of beneficial interest), treated | |
as having disposed of the shares in question. | |
(2) If this section applies, sections 510 and 511 apply as if the consideration | |
payable by the trustees to the participant on the disposal had been received by | 40 |
the trustees as the proceeds of disposal of plan shares. | |
| |
| |
|
