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(b) any allowable losses falling to be carried forward to that year | |
from a previous year for the purposes of section 2(2), | |
(c) section 3(1) (the annual exempt amount), | |
(d) any relief against capital gains tax under section 72 of the | |
Finance Act 1991 (deduction of trading losses), and | 5 |
(e) any relief against capital gains tax under section 90(4) of the | |
Finance Act 1995 (relief for post-cessation expenditure). | |
(6) A former employee may make a claim under subsection (3) and a | |
claim under section 555(3) of ITEPA 2003 in the same notice.” | |
218 In section 271 (other miscellaneous exemptions), for subsection (1)(c) | 10 |
substitute— | |
“(c) any gain accruing to a person from his acquisition and | |
disposal of assets held by him as part of a fund— | |
(i) mentioned in section 614(2) of the Taxes Act, | |
(ii) to which section 615(3) of the Taxes Act applies, or | 15 |
(iii) mentioned in section 648, 649, 650, 651 or 653 of | |
ITEPA 2003;”. | |
219 (1) Amend section 288(1) (interpretation) as follows. | |
(2) In the entry relating to “allowable loss” for “and 16” substitute “, 16 and | |
263ZA”. | 20 |
(3) After the entry relating to “investment trust” insert— | |
““ITEPA 2003” means the Income Tax (Earnings and Pensions) Act | |
2003”. | |
220 (1) Amend Schedule 7C (relief for transfers to approved share plans) as follows. | |
(2) In paragraph 1(1) (introductory) for “an employee share ownership” | 25 |
substitute “a share incentive”. | |
(3) In paragraph 2 (conditions relating to the disposal)— | |
(a) in sub-paragraph (1) for “Schedule 8 to the Finance Act 2000” | |
substitute “Schedule 2 to ITEPA 2003”, | |
(b) in sub-paragraph (2)— | 30 |
(i) for “Part VIII” substitute “Part 4”, | |
(ii) for “used in plan” substitute “awarded”, and | |
(iii) for “61(a) and (c)” substitute “27(1)(a) and (c) and (2)”, | |
(c) in sub-paragraph (4) for “of Schedule 8 to the Finance Act 2000” | |
substitute “given by paragraph 97 of Schedule 2 to ITEPA 2003”. | 35 |
221 After Schedule 7C insert— | |
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“Schedule 7D | |
Section 238A | |
Approved share schemes and share incentives | |
Part 1 | |
Approved share incentive plans | |
Introductory | 5 |
1 (1) The provisions of this Part of this Schedule apply for capital gains | |
tax purposes in relation to an approved share incentive plan (“the | |
plan”). | |
(2) This Part of this Schedule forms part of the SIP code (see section | |
488 of ITEPA 2003 (approved share incentive plans)). | 10 |
(3) Accordingly, expressions used in this Part of this Schedule and | |
contained in the index at the end of Schedule 2 to that Act | |
(approved share incentive plans) have the meaning indicated by | |
the index. | |
(4) In particular, for the purposes of paragraphs 5 and 7 of this | 15 |
Schedule “market value” has the meaning given by paragraph 92 | |
of Schedule 2 to that Act (determination of market value); and Part | |
8 of this Act has effect subject to this paragraph. | |
Gains accruing to trustees | |
2 (1) Any gain accruing to the trustees is not a chargeable gain if the | 20 |
shares— | |
(a) are shares in relation to which the requirements of Part 4 of | |
Schedule 2 to ITEPA 2003 (approved share incentive plans: | |
types of shares that may be awarded) are met, and | |
(b) are awarded to employees, or acquired on their behalf as | 25 |
dividend shares, in accordance with the plan within the | |
relevant period. | |
(2) If any of the shares in the company in question are readily | |
convertible assets at the time the shares are acquired by the | |
trustees, the relevant period is the period of two years beginning | 30 |
with the date on which the shares were acquired by the trustees. | |
This is subject to sub-paragraph (4). | |
(3) If at the time of the acquisition of the shares by the trustees none | |
of the shares in the company in question are readily convertible | |
assets, the relevant period is— | 35 |
(a) the period of five years beginning with the date on which | |
the shares were acquired by the trustees, or | |
(b) if within that period any of the shares in that company | |
become readily convertible assets, the period of two years | |
beginning with the date on which they did so, | 40 |
whichever ends first. | |
This is subject to sub-paragraph (4). | |
(4) If the shares are acquired by the trustees by virtue of a payment in | |
respect of which a deduction is allowed under paragraph 9 of | |
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(4) Schedule 4AA to the Taxes Act (deduction for contribution to plan | |
trust), the relevant period is the period of ten years beginning with | |
the date of acquisition. | |
(5) For the purposes of determining whether shares are awarded to a | |
participant within the relevant period, shares acquired by the | 5 |
trustees at an earlier time are taken to be awarded to a participant | |
before shares of the same class acquired by the trustees at a later | |
time. | |
(6) Sub-paragraph (5) is subject to paragraph 78(1) of Schedule 2 to | |
ITEPA 2003 (acquisition by trustees of shares from employee share | 10 |
ownership trust). | |
(7) For the purposes of this paragraph “readily convertible assets” has | |
the meaning given by sections 701 and 702 of that Act (readily | |
convertible assets). | |
This is subject to sub-paragraph (8). | 15 |
(8) In determining for the purposes of this paragraph whether shares | |
are readily convertible assets any market for the shares that— | |
(a) is created by virtue of the trustees acquiring shares for the | |
purposes of the plan, and | |
(b) exists solely for the purposes of the plan, | 20 |
shall be disregarded. | |
(9) In relation to shares acquired by the trustees before 11 May 2001 | |
this paragraph has effect with the substitution— | |
(a) in sub-paragraph (2), of “If the shares are readily | |
convertible assets at the time they” for the words before | 25 |
“are acquired”, and | |
(b) in sub-paragraph (3)— | |
(i) of “If at the time of their acquisition by the trustees | |
the shares are not readily convertible assets” for the | |
words before “the relevant period”, and | 30 |
(ii) in paragraph (b), of “the shares in question” for | |
“any of the shares in that company”. | |
Participant absolutely entitled as against trustees | |
3 (1) Sub-paragraph (2) applies to any shares awarded to a participant | |
under the plan. | 35 |
(2) The participant is treated for capital gains tax purposes as | |
absolutely entitled to those shares as against the trustees. | |
(3) Sub-paragraph (2) applies notwithstanding anything in the plan | |
or the trust instrument. | |
Different classes of shares | 40 |
4 (1) For the purposes of Chapter 1 of Part 4 of this Act (shares, | |
securities, options etc: general) a participant’s plan shares are | |
treated, so long as they are subject to the plan, as of a different class | |
from any shares (which would otherwise be treated as of the same | |
class) that are not plan shares. | 45 |
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(2) For the purposes of that Chapter, any shares to which sub- | |
paragraph (3) applies shall be treated as of a different class from | |
any shares to which sub-paragraph (4) applies, even if they would | |
otherwise fall to be treated as of the same class. | |
(3) This sub-paragraph applies to any shares transferred to the | 5 |
trustees of the plan trust by a qualifying transfer that have not | |
been awarded to participants under the plan. | |
(4) This sub-paragraph applies to any shares held by the trustees that | |
were not transferred to them by a qualifying transfer. | |
(5) In this paragraph “qualifying transfer” has the meaning given in | 10 |
paragraph 78(2) of Schedule 2 to ITEPA 2003 (acquisition by | |
trustees of shares from employee share ownership trust). | |
(6) For the purposes of Chapter 1 of Part 4 of this Act any shares | |
which— | |
(a) were acquired by the trustees by virtue of a payment in | 15 |
respect of which a deduction is allowed under paragraph | |
9 of Schedule 4AA to the Taxes Act (deduction for | |
contribution to plan trust), and | |
(b) have not been awarded under the plan, | |
shall be treated as of a different class from any shares held by the | 20 |
trustees that were not so acquired by them, even if they would | |
otherwise fall to be treated as of the same class. | |
No chargeable gain on shares ceasing to be subject to the plan | |
5 (1) Shares which cease to be subject to the plan are treated as having | |
been disposed of and immediately reacquired by the participant at | 25 |
market value. | |
(2) Any gain accruing on that disposal is not a chargeable gain. | |
Deemed disposal by trustees on disposal of beneficial interest | |
6 (1) If at any time the participant’s beneficial interest in any of his | |
shares is disposed of, the shares in question shall be treated for the | 30 |
purposes of the SIP code as having been disposed of at that time | |
by the trustees for the like consideration as was obtained for the | |
disposal of the beneficial interest. | |
(2) For this purpose there is no disposal of the participant’s beneficial | |
interest if and at the time when— | 35 |
(a) in England and Wales or Northern Ireland, that interest | |
becomes vested in any person on the insolvency of the | |
participant or otherwise by operation of law, or | |
(b) in Scotland, that interest becomes vested in a judicial | |
factor, in a trustee of the participant’s sequestrated estate | 40 |
or in a trustee for the benefit of the participant’s creditors. | |
(3) If a disposal of shares falling within this paragraph is not at arm’s | |
length, the proceeds of the disposal shall be taken for the purposes | |
of the SIP code to be equal to the market value of the shares at the | |
time of the disposal. | 45 |
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Treatment of forfeited shares | |
7 (1) If any of the participant’s plan shares are forfeited, they are treated | |
as having been disposed of by the participant and acquired by the | |
trustees at market value at the date of forfeiture. | |
(2) Any gain accruing on that disposal is not a chargeable gain. | 5 |
Disposal of rights under rights issue | |
8 (1) Any gain accruing on the disposal of rights under paragraph 77 of | |
Schedule 2 to ITEPA 2003 (power of trustees to raise funds to | |
subscribe for rights issue) is not a chargeable gain. | |
(2) Sub-paragraph (1) does not apply to a disposal of rights unless | 10 |
similar rights are conferred in respect of all ordinary shares in the | |
company. | |
Part 2 | |
Approved SAYE option schemes | |
Introductory | 15 |
9 (1) This Part of this Schedule forms part of the SAYE code (see section | |
516 of ITEPA 2003 (approved SAYE option schemes)). | |
(2) Accordingly, expressions used in this Part of this Schedule and | |
contained in the index at the end of Schedule 3 to that Act | |
(approved SAYE option schemes) have the meaning indicated by | 20 |
the index. | |
Market value rule not to apply | |
10 (1) This paragraph applies where— | |
(a) a share option (“the option”) has been granted to an | |
individual— | 25 |
(i) in accordance with the provisions of an approved | |
SAYE option scheme, and | |
(ii) by reason of the individual’s office or employment | |
as a director or employee of a company, | |
(b) the individual exercises the option in accordance with the | 30 |
provisions of the SAYE option scheme at a time when the | |
scheme is approved, and | |
(c) Condition A or Condition B in section 519(2) or (3) of | |
ITEPA 2003 (no charge in respect of exercise of option) is | |
met. | 35 |
(2) The company mentioned in sub-paragraph (1)(a)(ii) may be— | |
(a) the company whose shares are the subject of the option, or | |
(b) some other company. | |
(3) If the option— | |
(a) was granted under the SAYE option scheme before the | 40 |
withdrawal of approval under paragraph 42 of Schedule 3 | |
to ITEPA 2003, but | |
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(b) is exercised after the withdrawal of approval, | |
then, for the purposes of sub-paragraph (1)(b) above in its | |
application to the option, the scheme is to be treated as if it were | |
still approved at the time of the exercise. | |
(4) Section 17(1) (disposals and acquisitions treated as made at market | 5 |
value) shall not apply in calculating the consideration for— | |
(a) the individual’s acquisition of shares by the exercise of the | |
option, or | |
(b) any corresponding disposal of those shares to the | |
individual. | 10 |
Part 3 | |
Approved CSOP schemes | |
Introductory | |
11 (1) This Part of this Schedule forms part of the CSOP code (see section | |
521 of ITEPA 2003 (approved CSOP schemes)). | 15 |
(2) Accordingly, expressions used in this Part of this Schedule and | |
contained in the index at the end of Schedule 4 to that Act | |
(approved CSOP schemes) have the meaning indicated by the | |
index. | |
(3) This Part of this Schedule applies where— | 20 |
(a) a share option (“the option”) has been granted to an | |
individual— | |
(i) in accordance with the provisions of an approved | |
CSOP scheme, and | |
(ii) by reason of the individual’s office or employment | 25 |
as a director or employee of a company, and | |
(b) shares (“the relevant shares”) are acquired by the exercise | |
of the option. | |
(4) The company mentioned in sub-paragraph (3)(a)(ii) may be— | |
(a) the company whose shares are the subject of the option, or | 30 |
(b) some other company. | |
Relief where income tax charged in respect of grant of option | |
12 (1) This paragraph applies where an amount (the “employment | |
income amount”) counted as employment income of the | |
individual under section 526 of ITEPA 2003 (charge where option | 35 |
granted at a discount) in respect of the option. | |
(2) For the purposes of section 38(1)(a) (acquisition and disposal costs | |
etc.), that part of the employment income amount which is | |
attributable to the relevant shares shall be treated as consideration | |
given for the acquisition of the relevant shares. | 40 |
(3) This paragraph also applies where the individual was chargeable | |
to income tax on an amount in respect of the option under— | |
(a) subsection (6) of section 185 of ICTA (as it had effect before | |
1st January 1992), | |
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(b) subsection (6A) of that section (as it had effect in relation to | |
options obtained on or after 1st January 1992 but before 29 | |
April 1996), or | |
(c) subsection (6) of that section (as it had effect in relation to | |
options obtained on or after 29 April 1996); | 5 |
and in such a case the “employment income amount” means the | |
amount on which the individual was so chargeable. | |
(4) This paragraph applies whether or not— | |
(a) the exercise of the option is in accordance with the | |
provisions of the CSOP scheme, or | 10 |
(b) the CSOP scheme is approved at the time of the exercise. | |
Market value rule not to apply | |
13 (1) This paragraph applies where— | |
(a) the individual exercises the option in accordance with the | |
provisions of the CSOP scheme at a time when the scheme | 15 |
is approved, and | |
(b) the condition in section 524(2) of ITEPA 2003 (no charge in | |
respect of exercise of option) is met. | |
(2) Section 17(1) (disposals and acquisitions treated as made at market | |
value) shall not apply in calculating the consideration for— | 20 |
(a) the individual’s acquisition of the relevant shares by the | |
exercise of the option, or | |
(b) any corresponding disposal of the relevant shares to the | |
individual. | |
Part 4 | 25 |
Enterprise management incentives | |
Introductory | |
14 (1) This Part of this Schedule forms part of the EMI code (see section | |
527 of ITEPA 2003 (enterprise management incentives: qualifying | |
options)). | 30 |
(2) Accordingly, expressions used in this Part of this Schedule and | |
contained in the index at the end of Schedule 5 to that Act | |
(enterprise management incentives) have the meaning indicated | |
by the index. | |
(3) In this Part of this Schedule, “qualifying shares”— | 35 |
(a) means shares acquired by the exercise of a qualifying | |
option, subject to sub-paragraphs (4) and (5), and | |
(b) includes shares (“replacement shares”) which— | |
(i) are treated under section 127 (equation of original | |
shares and new holding) as the same asset as a | 40 |
holding of qualifying shares, and | |
(ii) meet the requirements of paragraph 35 of Schedule | |
5 to ITEPA 2003 (type of shares that may be | |
acquired). | |
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