|
| |
| |
Deductions for contributions to running expenses of plan | |
8 (1) Nothing in this Schedule affects any deduction for expenses | |
incurred by a company in contributing to the expenses of the | |
trustees in operating an approved share incentive plan. | |
(2) For this purpose the expenses of the trustees in operating the | 5 |
plan— | |
(a) do not include expenses in acquiring shares for the | |
purposes of the trust, other than incidental acquisition | |
costs, but | |
(b) do include the payment of interest on money borrowed by | 10 |
them for that purpose. | |
(3) In sub-paragraph (2)(a) “incidental acquisition costs” means any | |
fees, commission, stamp duty and similar incidental costs | |
attributable to the acquisition of the shares. | |
Deduction for contribution to plan trust | 15 |
9 (1) A deduction is allowed to a company under this paragraph | |
where— | |
(a) on or after 6th April 2003, that company makes a payment | |
to the trustees of an approved share incentive plan in order | |
to enable them to acquire shares in that company or a | 20 |
company which controls it, | |
(b) the payment is applied by the trustees to acquire such | |
shares, | |
(c) the shares are not acquired from a company, and | |
(d) the condition in sub-paragraph (2) is met in relation to the | 25 |
company in which the shares are acquired. | |
(2) The condition in this sub-paragraph is that, at the end of the | |
period of 12 months beginning with the date of the acquisition, the | |
trustees hold shares in the company for the plan trust that— | |
(a) constitute not less than 10 per cent of the ordinary share | 30 |
capital of the company, and | |
(b) carry rights to not less than 10 per cent of— | |
(i) any profits available for distribution to | |
shareholders of the company, | |
(ii) any assets of that company available for | 35 |
distribution to its shareholders in the event of a | |
winding-up. | |
(3) For the purposes of sub-paragraph (2), shares that have been | |
appropriated to, and acquired on behalf of, an individual under | |
the plan shall continue to be treated as held by the trustees of the | 40 |
plan trust for the beneficiaries of that trust until such time as they | |
cease to be subject to the plan (within the meaning of the SIP code). | |
(4) A deduction allowed under this paragraph— | |
(a) is of an amount equal to the amount of the payment | |
referred to in sub-paragraph (1), and | 45 |
(b) must be made for the period of account in which the | |
condition in sub-paragraph (2) is met. | |
| |
| |
|
| |
| |
(5) No other deduction is allowed for any amount in respect of which | |
a deduction has been made under this paragraph (except as | |
specified in paragraph 10). | |
Withdrawal of deduction under paragraph 9 | |
10 (1) The Inland Revenue may by notice direct that the benefit of a | 5 |
deduction made under paragraph 9 is withdrawn where— | |
(a) fewer than 30 per cent of the shares acquired by virtue of | |
the payment in respect of which the deduction is made | |
have been awarded under the plan before the end of the | |
period of 5 years beginning with the date of acquisition, or | 10 |
(b) not all the shares acquired by virtue of that payment have | |
been so awarded before the end of the period of 10 years | |
beginning with that date. | |
(2) The effect of a direction under sub-paragraph (1)(a) or (b) is that | |
the amount of the deduction is treated as a trading receipt of the | 15 |
company for the period of account in which the direction is given. | |
(3) However, where— | |
(a) the Inland Revenue give a direction under sub-paragraph | |
(1)(a) or (b) in respect of any deduction, and | |
(b) at any time after the giving of the direction, all the shares | 20 |
acquired by virtue of the payment in respect of which the | |
deduction was made are awarded under the plan, | |
a further deduction is allowed under this sub-paragraph to the | |
company which made the payment. | |
(4) A deduction under sub-paragraph (3)— | 25 |
(a) is of an amount equal to the amount of the payment | |
referred to in that sub-paragraph, and | |
(b) must be made for the period of account in which sub- | |
paragraph (3)(b) is first satisfied. | |
(5) No other deduction is allowed in respect of any amount for which | 30 |
a deduction has been made under sub-paragraph (3). | |
(6) Sub-paragraph (8) applies where— | |
(a) a deduction is made under paragraph 9 (deduction for | |
contribution to plan trust) or sub-paragraph (3) in respect | |
of a payment for the acquisition of shares, but | 35 |
(b) shares are awarded under the plan to an individual at a | |
time when the earnings from the required employment— | |
(i) are not (or would not be if there were any) | |
chargeable earnings, and | |
(ii) would not be chargeable earnings if remitted to the | 40 |
United Kingdom. | |
(7) In sub-paragraph (6) “required employment” and “chargeable | |
earnings”, in relation to an individual, have the same meanings as | |
they have in paragraph 4(2) (cases in which no deduction is | |
allowed). | 45 |
| |
| |
|
| |
| |
(8) An amount equal to the appropriate proportion of the deduction | |
is treated as a trading receipt of the company for the period of | |
account in which the shares are so awarded. | |
(9) For the purposes of sub-paragraph (8), the appropriate proportion | |
of the deduction is the proportion which the number of shares | 5 |
awarded to the individual bears to the total number of shares | |
acquired by virtue of the payment. | |
(10) For the purposes of this paragraph, where shares are acquired by | |
the trustees on different days, it shall be assumed that those | |
acquired on an earlier day are awarded to employees under the | 10 |
plan before those acquired by the trustees on a later day. | |
Withdrawal of deductions on withdrawal of approval | |
11 (1) If approval of a share incentive plan is withdrawn the Inland | |
Revenue may by notice to a company direct that the benefit of— | |
(a) any deductions under paragraph 2 (deduction for | 15 |
providing free or matching shares), | |
(b) any deductions under paragraph 3 (deduction for | |
additional expenses in providing partnership shares), | |
(c) any deductions under paragraph 9 (deduction for | |
contribution to plan trust) (in so far as not already | 20 |
withdrawn under paragraph 10), or | |
(d) any deductions under paragraph 10(3) (further deduction | |
where deduction under paragraph 9 withdrawn), | |
in relation to the plan is also withdrawn. | |
(2) The effect of the direction is that the aggregate amount of the | 25 |
deductions is treated as a trading receipt of that company for the | |
period of account in which the Inland Revenue give notice of the | |
withdrawal of approval. | |
Termination of plan: shares acquired as mentioned in paragraph 9 but not yet | |
awarded | 30 |
12 (1) This paragraph applies where the company has issued a plan | |
termination notice under paragraph 89 of Schedule 2 to ITEPA | |
2003 (termination of plan). | |
(2) In a case where— | |
(a) by virtue of a payment made to the trustees by the | 35 |
company, the trustees acquire shares in the company, or a | |
company which controls it, | |
(b) a deduction under paragraph 9 (deduction for | |
contribution to plan trust) has been made in respect of that | |
payment (and has not been withdrawn under paragraph | 40 |
10), and | |
(c) not all the shares acquired by virtue of the payment have | |
been awarded under the plan before issue of the plan | |
termination notice, | |
an amount equal to the appropriate proportion of the deduction is | 45 |
treated as a trading receipt of the company for the period of | |
account in which the plan termination notice is given. | |
| |
| |
|
| |
| |
(3) For the purposes of sub-paragraph (2), the appropriate proportion | |
of the deduction is the proportion which the number of shares | |
acquired by virtue of the payment and not awarded as specified in | |
sub-paragraph (2)(c) bears to the total number of shares so | |
acquired. | 5 |
Application of provisions to expenses of management of investment companies etc. | |
13 (1) The provisions of this Schedule apply in relation to— | |
(a) investment companies, and | |
(b) companies to which section 75 (expenses of management: | |
investment companies) applies by virtue of section 76 | 10 |
(expenses of management: insurance companies), | |
in accordance with the following provisions. | |
(2) The provisions of this Schedule which allow a deduction in | |
calculating the profits of a trade apply to treat amounts as | |
disbursed as expenses of management. | 15 |
(3) Paragraph 11(2) applies as if the reference to a trading receipt for | |
the period of account in which the Inland Revenue give notice of | |
the withdrawal of approval were a reference to profits or gains | |
chargeable to tax under Case VI of Schedule D arising when the | |
Inland Revenue give notice of the withdrawal.” | 20 |
110 Omit Schedules 6 and 6A (taxation of directors and others: cars and vans). | |
111 Omit Schedules 7 and 7A (taxation of benefit of loans). | |
112 (1) Amend Schedule 9 (approved share option schemes and profit sharing | |
schemes) as follows. | |
(2) Omit Parts 1, 2 and 6 except so far as relating to profit sharing schemes. | 25 |
(3) Omit Parts 3 and 4. | |
113 (1) Amend Schedule 10 (further provisions relating to profit sharing schemes) | |
as follows. | |
(2) In paragraphs 3(1) and 6(4) for “charging an individual to income tax under | |
Schedule E” substitute “under which an amount counts as employment | 30 |
income of an individual”. | |
(3) In paragraph 7— | |
(a) in sub-paragraph (1), for “a participant in the scheme is chargeable to | |
income tax under Schedule E” substitute “an amount counts as | |
employment income of the participant”, | 35 |
(b) in sub-paragraph (6), for the words from “section 203” to “Schedule | |
E” substitute “section 684 of ITEPA 2003 (PAYE regulations) and | |
PAYE regulations as PAYE income payable to the recipient”, and | |
(c) in sub-paragraph (7)(b)— | |
(i) omit second “to”, and | 40 |
(ii) for “the participant is chargeable” substitute “is charged on | |
the participant”. | |
114 Omit Schedule 11 (payments and other benefits in connection with | |
termination of employment etc.). | |
115 Omit Schedule 11A (removal benefits and expenses). | 45 |
| |
| |
|
| |
| |
116 Omit Schedule 12 (foreign earnings). | |
117 Omit Schedule 12AA (mileage allowances). | |
118 Omit Schedule 12A (ordinary commuting and private travel). | |
119 In Schedule 14 (modification of section 266 in certain cases), in paragraph 5 | |
for “section 595” substitute “section 386 of ITEPA 2003 (payments to non- | 5 |
approved retirement benefits schemes)”. | |
120 (1) Amend paragraph 2 of Schedule 15A (contractual savings schemes) as | |
follows. | |
(2) In sub-paragraph (1)(a) for “savings-related share” substitute “SAYE”. | |
(3) For sub-paragraph (2) substitute— | 10 |
“(2) In sub-paragraph (1) above, “approved” and “SAYE option | |
scheme” have the same meanings as in the SAYE code (see section | |
516(4) of ITEPA 2003 (approved SAYE option schemes)).” | |
121 (1) Amend paragraph 5B of Schedule 18 (group relief: equity holders and | |
profits available for distribution) as follows. | 15 |
(2) In sub-paragraph (4)(d) for “approved under Schedule 9” substitute “which | |
was approved”. | |
(3) After sub-paragraph (4) insert— | |
“(4A) In sub-paragraph (4)(d) above— | |
“share option scheme” means— | 20 |
(a) an SAYE option scheme within the meaning of the | |
SAYE code (see section 516(4) of ITEPA 2003 | |
(approved SAYE option schemes)), or | |
(b) a CSOP scheme within the meaning of the CSOP | |
code (see section 521(4) of that Act (approved | 25 |
CSOP schemes)); and | |
“approved” means— | |
(a) in relation to an SAYE option scheme, approved | |
under Schedule 3 to that Act (approved SAYE | |
option schemes), and | 30 |
(b) in relation to a CSOP scheme, approved under | |
Schedule 4 to that Act (approved CSOP | |
schemes).” | |
Part 2 | |
Other enactments | 35 |
Finance Act 1969 (c. 32) | |
122 (1) Section 58 of the Finance Act 1969 (disclosure of information for statistical | |
purposes by Board of Inland Revenue) is amended as follows. | |
(2) In subsection (1)(a)— | |
(a) for “section 203 of the Taxes Act 1988 (pay as you earn)” substitute | 40 |
“PAYE regulations”; | |
(b) for “emoluments to which that section applies” substitute “earnings | |
or amounts treated as earnings from an employment”. | |
| |
| |
|
| |
| |
(3) In subsection (1)(b) for “emoluments” substitute “earnings or amounts | |
treated as earnings”. | |
(4) After subsection (1) insert— | |
“(1A) In subsection (1) “earnings or amounts treated as earnings” means | |
earnings or amounts treated as earnings which constitute | 5 |
employment income (see section 7(2)(a) or (b) of the Income Tax | |
(Earnings and Pensions) Act 2003).” | |
Taxes Management Act 1970 (c. 9) | |
123 The Taxes Management Act 1970 is amended as follows. | |
124 In section 7(4) and (5) (notice of liability to income tax and capital gains tax) | 10 |
for “section 203 of the principal Act” substitute “PAYE regulations”. | |
125 (1) Amend section 9 (returns to include self-assessment) as follows. | |
(2) In subsection (1) for “, 547(5) or 599A(5) of the principal Act” substitute “or | |
547(5) of the principal Act or section 626 of ITEPA 2003”. | |
(3) In subsection (1A) after “the principal Act” insert “or under section 394(2) of | 15 |
ITEPA 2003”. | |
126 (1) Amend section 15 (return of employee’s emoluments etc.) as follows. | |
(2) For the sidenote to the section substitute “Return of employees’ earnings | |
etc.” | |
(3) In subsection (3)(a) for “employment to which Chapter II of Part V of the | 20 |
principal Act applies” substitute “employment which, for the purposes of | |
the benefits code in ITEPA 2003, is a taxable employment under Part 2 of that | |
Act (see section 66) but is not an excluded employment (see section 63 of that | |
Act)”. | |
(4) In subsection (8)(a) for “the relevant sections, that is to say, sections 141, 142, | 25 |
143, 144A, 145, 146 and 154 to 165 of the principal Act” substitute “the | |
relevant provisions, that is to say, Chapters 4 to 10 of Part 3 and sections 222 | |
and 223 of ITEPA 2003”. | |
(5) In subsection (9)(a) for “the relevant sections” substitute “the relevant | |
provisions”. | 30 |
(6) In subsection (11)— | |
(a) for “the relevant sections”, in each place, substitute “the relevant | |
provisions”; and | |
(b) in paragraph (a)(ii) for “section 141(3), 142(2), 145(3) or 156(8) of the | |
principal Act” substitute “section 328(1), 362, 363, 364 or 365 of | 35 |
ITEPA 2003”. | |
(7) In subsection (13)— | |
(a) in the definition of “employee”, for “whose emoluments fall to be | |
assessed under Schedule E” substitute “whose earnings are within | |
the charge to tax under ITEPA 2003”; and | 40 |
(b) for the definition of “the relevant sections” substitute— | |
““the relevant provisions” has the meaning given by section | |
(8)(a) above.” | |
127 For section 16A substitute— | |
| |
| |
|
