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(i) any shares acquired by the employee (whether or not as a result | |
of the exercise of a right to acquire shares) under a scheme | |
approved under Schedule 3 (approved SAYE option schemes) | |
or 4 (approved CSOP schemes), or Schedule 9 to ICTA | |
(approved profit sharing schemes); | 5 |
(ii) any right over or interest in shares obtained or acquired by the | |
employee under such a scheme; or | |
(iii) any shares acquired by the employee as the result of the exercise | |
of a right over shares obtained before 27th November 1996, | |
if the shares in question form part of the ordinary share capital of a | 10 |
company falling within subsection (3); or | |
(d) any description of property for the time being excluded from the scope | |
of this section by PAYE regulations. | |
(3) A company falls within this subsection if it— | |
(a) is the employer (“the employer company”); | 15 |
(b) has control of the employer company; or | |
(c) either is, or has control of, a company which is a member of a | |
consortium owning either the employer company or a company having | |
control of the employer company. | |
(4) In this section “share” includes stock. | 20 |
(5) For the purposes of this section a company is a member of a consortium | |
owning another company if it is one of a number of companies which between | |
them beneficially own not less than 75% of the other company’s ordinary share | |
capital and each of which beneficially owns not less than 5% of that capital. | |
702 Meaning of “readily convertible asset” | 25 |
(1) In this Chapter “readily convertible asset” means— | |
(a) an asset capable of being sold or otherwise realised on— | |
(i) a recognised investment exchange (within the meaning of the | |
Financial Services and Markets Act 2000 (c. 8)), | |
(ii) the London Bullion Market, | 30 |
(iii) the New York Stock Exchange, or | |
(iv) a market for the time being specified in PAYE regulations; | |
(b) an asset consisting in— | |
(i) the rights of an assignee, or any other rights, in respect of a | |
money debt that is or may become due to the employer or any | 35 |
other person, | |
(ii) property that is subject to a warehousing regime, or any right in | |
respect of property so subject, or | |
(iii) anything that is likely (without anything being done by the | |
employee) to give rise to, or to become, a right enabling a person | 40 |
to obtain an amount or total amount of money which is likely to | |
be similar to the expense incurred in the provision of the asset; | |
or | |
(c) an asset for which trading arrangements are in existence, or are likely | |
to come into existence in accordance with— | 45 |
(i) any arrangements of another description existing when the | |
asset is provided, or | |
(ii) any understanding existing at that time. | |
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(2) For the purposes of this section trading arrangements for any asset provided to | |
any person exist whenever there exist any arrangements the effect of which in | |
relation to that asset is to enable— | |
(a) that person, or | |
(b) a member of that person’s family or household, | 5 |
to obtain an amount or total amount of money that is, or is likely to be, similar | |
to the expense incurred in the provision of that asset. | |
(3) PAYE regulations may exclude any description of arrangements from being | |
trading arrangements for the purposes of this section. | |
(4) References in this section to enabling a person to obtain an amount of money | 10 |
are to be read— | |
(a) as references to enabling an amount to be obtained by that person by | |
any means at all, including in particular— | |
(i) by using any asset or other property as security for a loan or | |
advance, or | 15 |
(ii) by using any rights comprised in or attached to any asset or | |
other property to obtain any asset for which trading | |
arrangements exist; and | |
(b) as including references to cases where a person is enabled to obtain an | |
amount as a member of a class or description of persons, as well as | 20 |
where the person is so enabled in the person’s own right. | |
(5) For the purposes of this section an amount is similar to the expense incurred in | |
the provision of any asset if it is, or is an amount of money equivalent to— | |
(a) the amount of the expense so incurred, or | |
(b) a greater amount, or | 25 |
(c) an amount that is less than that amount but not substantially so. | |
(6) In this section— | |
“money” includes money expressed in a currency other than sterling; | |
“money debt” means any obligation which falls to be, or may be, settled— | |
(a) by the payment of money, or | 30 |
(b) the transfer of a right to settlement under an obligation which is | |
itself a money debt; | |
“warehousing regime” means— | |
(a) a warehousing or fiscal warehousing regime (within the | |
meaning of sections 18 to 18F of the Value Added Tax Act 1994); | 35 |
or | |
(b) any corresponding arrangements in a State other than the | |
United Kingdom which is a Contracting Party to the Agreement | |
on the European Economic Area signed at Oporto on 2nd May | |
1992 as adjusted by the Protocol signed at Brussels on 17th | 40 |
March 1993. | |
Chapter 5 | |
PAYE settlement agreements | |
703 Introduction | |
This Chapter provides— | 45 |
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(a) for employers to make agreements with the Inland Revenue (“PAYE | |
settlement agreements”) under which they agree to be accountable to | |
the Board for sums in respect of income tax on general earnings of their | |
employees; and | |
(b) for such earnings to be treated for certain purposes of the Income Tax | 5 |
Acts as excluded from the employees’ income. | |
704 Sums payable by employers under agreements | |
(1) PAYE regulations may provide— | |
(a) for a person to make a PAYE settlement agreement with the Inland | |
Revenue; and | 10 |
(b) to such extent as may be prescribed, for that person’s accountability, | |
and the sums to be accounted for, in respect of income tax on general | |
earnings of that person’s employees to be determined— | |
(i) in accordance with the agreement, and | |
(ii) not in accordance with PAYE regulations which would apply | 15 |
apart from this Chapter. | |
(2) Without prejudice to the generality of section 684(2), any power of the Board to | |
make PAYE regulations with respect to sums falling to be accounted for under | |
such regulations includes power to make the corresponding provision with | |
respect to sums falling to be accounted for in accordance with a PAYE | 20 |
settlement agreement. | |
705 Approximations allowed in calculations | |
PAYE regulations may provide for a PAYE settlement agreement to allow | |
sums which an employer is to account for— | |
(a) to be computed, if two or more persons hold employments to which the | 25 |
agreement relates, by reference to a number of those persons all taken | |
together; | |
(b) to include sums representing income tax on an estimated amount taken | |
to be the aggregate of the amounts of PAYE income consisting of— | |
(i) taxable benefits provided or made available by reason of the | 30 |
employments to which the agreement relates, and | |
(ii) expenses paid to the persons holding those employments; and | |
(c) to be computed in a manner under which they do not necessarily | |
represent an amount of income tax which would be payable (apart | |
from the agreement) by persons holding employments to which the | 35 |
agreement relates. | |
706 Exclusion of general earnings from income etc. | |
PAYE regulations may provide— | |
(a) that sums accountable for by an employer under a PAYE settlement | |
agreement, or any other sums, are not to be treated for any prescribed | 40 |
purpose as tax deducted from general earnings; | |
(b) that an employee is to have no right to be treated as having paid tax in | |
respect of sums accountable for by the employer under such an | |
agreement; | |
(c) that an employee is to be treated, except— | 45 |
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(i) for the purposes of the obligations imposed on the employer by | |
such an agreement, and | |
(ii) to such further extent as may be prescribed, | |
as relieved from any prescribed obligations of the employee under the | |
Income Tax Acts in respect of general earnings from an employment to | 5 |
which the agreement relates; and | |
(d) that such earnings are to be treated as excluded from the employee’s | |
income for such further purposes of the Income Tax Acts, and to such | |
extent, as may be prescribed. | |
707 Interpretation of this Chapter | 10 |
In this Chapter— | |
“employment” means any employment the general earnings from which | |
are (or, apart from any regulations made by virtue of this section, | |
would be) PAYE income and related expressions are to be construed | |
accordingly; | 15 |
“prescribed” means prescribed by PAYE regulations; | |
“taxable benefit”, in relation to an employee, means any benefit provided | |
or made available, otherwise than in the form of a payment of money, | |
to the employee, or to a person who is a member of the employee’s | |
family or household. | 20 |
Chapter 6 | |
Miscellaneous and supplemental | |
708 PAYE repayments | |
(1) PAYE regulations may provide that no repayment of income tax may be made | |
under such regulations to a person— | 25 |
(a) during a period for which the person has claimed jobseeker’s | |
allowance, or | |
(b) at a time when the person is prevented by the trade disputes provisions | |
from being entitled to a jobseeker’s allowance, or would be so | |
prevented if the person otherwise met the conditions for entitlement. | 30 |
(2) Different provision may be made with respect to— | |
(a) persons within subsection (1)(a), and | |
(b) persons within subsection (1)(b). | |
(3) “The trade disputes provisions” means— | |
(a) section 14 of JSA 1995, or | 35 |
(b) Article 16 of JS(NI)O 1995. | |
709 Additional provision for certain assessments | |
(1) This section applies if— | |
(a) an assessment to income tax is made as respects relevant income (with | |
or without other income), and | 40 |
(b) the assessment is made after the end of the period of 12 months | |
following the tax year for which it is made. | |
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(2) In so far as it relates to relevant income, the assessment is to be made in | |
accordance with the practice generally prevailing at the end of that period. | |
(3) “Relevant income” means income which— | |
(a) has been taken into account in the making of deductions or repayments | |
of tax under PAYE regulations, and | 5 |
(b) was received not less than 12 months before the beginning of the tax | |
year in which the assessment is made. | |
710 Notional payments: accounting for tax | |
(1) If an employer makes a notional payment of PAYE income of an employee, the | |
employer must deduct income tax at the relevant time from any payment or | 10 |
payments the employer actually makes of, or on account of, PAYE income of | |
the employee. | |
(2) For the purposes of this section— | |
(a) a notional payment is a payment treated as made by virtue of any of | |
sections 687, 689 and 693 to 700, other than a payment whose amount is | 15 |
given by section 687(3)(a) or 689(3)(a), and | |
(b) any reference to an employer includes a reference to a person who is | |
treated as making a payment by virtue of section 689(2). | |
(3) Subsection (4) applies if, because the payments actually made are insufficient | |
for the purpose, the employer is unable to deduct the full amount of the income | 20 |
tax as required by subsection (1). | |
(4) The employer must account to the Board of Inland Revenue at the relevant time | |
for an amount of income tax equal to the amount of income tax the employer | |
is required, but is unable, to deduct. | |
(5) PAYE regulations may make provision— | 25 |
(a) with respect to the time when any notional payment (or description of | |
notional payment) is made, | |
(b) applying (with or without modifications) any specified provisions of | |
the regulations for the time being in force in relation to deductions from | |
actual payments to amounts accounted for in respect of any notional | 30 |
payments, | |
(c) with respect to the collection and recovery of amounts accounted for in | |
respect of notional payments. | |
(6) Any amount— | |
(a) which an employer deducts as mentioned in subsection (1), or | 35 |
(b) for which an employer accounts as mentioned in subsection (4), | |
is to be treated as an amount which, at the time when the notional payment is | |
made, is paid by the employee in respect of the employee’s liability to income | |
tax. | |
(7) “The relevant time” means— | 40 |
(a) in subsection (1), any occasion— | |
(i) on or after the time when the notional payment is made, and | |
(ii) falling within the same income tax period, | |
on which the employer actually makes a payment of, or on account of, | |
PAYE income of the employee; | 45 |
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(b) in subsection (4), any time within 14 days of the end of the income tax | |
period in which the notional payment was made. | |
(8) In subsection (7) “income tax period” has the same meaning as in the Income | |
Tax (Employments) Regulations 1993, or any subsequent regulations making | |
corresponding provision. | 5 |
711 Right to make a return | |
(1) A person who has PAYE income for a tax year in respect of which deductions | |
or repayments are made under PAYE regulations may by notice require the | |
Inland Revenue to give that person a notice under section 8 of TMA 1970 | |
(personal return) for the tax year. | 10 |
(2) A notice to the Inland Revenue under subsection (1) must be given no later | |
than 5 years after the 31st October next following the tax year. | |
712 Interpretation of this Part | |
(1) In this Part— | |
“employee” means a person who holds or has held employment with | 15 |
another person; | |
“employer” means— | |
(a) in relation to an employee, a person with whom the employee | |
holds or has held an employment, and | |
(b) in relation to any PAYE income of an employee, the person who | 20 |
is the employer of the employee in relation to the employment | |
in respect of which the income is or was provided or, as the case | |
may be, by reference to which it falls to be regarded as PAYE | |
income. | |
The above definitions are subject to sections 688 and 710(2)(b). | 25 |
(2) Sections 4 and 5 apply for the purposes of this Part as they apply for the | |
purposes of the employment income Parts. | |
Part 12 | |
Payroll giving | |
713 Donations to charity: payroll deduction scheme | 30 |
(1) This section applies if— | |
(a) an individual is entitled to receive payments of, or on account of, PAYE | |
income in respect of which PAYE regulations require deductions or | |
repayments of income tax in accordance with those regulations, and | |
(b) at the request of the individual, the person making the payments (the | 35 |
“payer”) withholds sums from them as donations. | |
(2) In determining whether there is such a requirement under PAYE regulations | |
for the purposes of subsection (1)(a), any requirement under the regulations | |
which requires the deduction of an amount in calculating the payments of, or | |
on account of, PAYE income is to be disregarded. | 40 |
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(3) The amount of the donations is allowed as a deduction in calculating the | |
amount of the individual’s income which is charged to tax in accordance with | |
subsection (4). | |
(4) In the case of a payment of, or on account of— | |
(a) taxable earnings from an employment, the deduction is allowed from | 5 |
the taxable earnings from the employment in calculating the net taxable | |
earnings from the employment for the relevant tax year for the | |
purposes of Part 2 (see section 11(1)); | |
(b) taxable specific income from an employment, the deduction is allowed | |
from that taxable specific income in calculating the net taxable specific | 10 |
income from the employment for the relevant tax year for the purposes | |
of Part 2 (see section 12(1)); | |
(c) taxable pension income for a pension, annuity or other item of pension | |
income, the deduction is allowed from that taxable pension income in | |
calculating the net taxable pension income for that income for the | 15 |
relevant tax year for the purposes of Part 9 (see section 567(3)); | |
(d) taxable social security income for a taxable benefit, the deduction is | |
allowed from that taxable social security income in calculating the net | |
taxable social security income for that benefit for the relevant tax year | |
for the purposes of Part 10 (see section 658(3)). | 20 |
(5) For the purposes of subsection (4) “relevant tax year” means— | |
(a) in the case of paragraphs (a) and (b), the tax year in which the donation | |
is withheld, and | |
(b) in the case of paragraphs (c) and (d), the tax year for which the income | |
referred to in subsection (1)(a) is taxable pension income or taxable | 25 |
social security income, as the case may be. | |
714 Meaning of “donations” | |
(1) For the purposes of this Part “donations” means sums which— | |
(a) are withheld by the payer under a scheme which is an approved | |
scheme at the time of the withholding, | 30 |
(b) constitute gifts by the individual to one or more specified charities | |
under the scheme, and | |
(c) satisfy the conditions (if any) set out in the scheme. | |
(2) In this section— | |
“approved scheme” means a scheme which is approved (or is of a kind | 35 |
approved) by the Inland Revenue and under which— | |
(a) the payer is required to pay sums withheld to a body which is | |
an approved agent at the time of the withholding, and | |
(b) the approved agent is required— | |
(i) to pay sums withheld to the specified charity or charities, | 40 |
or | |
(ii) in a case where the agent is itself a specified charity, to | |
retain any sum due to itself; | |
“charity” means any body of persons or trust established for charitable | |
purposes only and includes each of the bodies mentioned in section 507 | 45 |
of ICTA; | |
“specified charity” means a charity specified by the individual. | |
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