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(b) if the plan provides for an accumulation period, 10% of the total of the | |
employee’s salary payments over that period. | |
(3) The plan may authorise the company to specify lower limits than those | |
specified in sub-paragraphs (1) and (2). | |
(4) If it does so, different limits may be specified in relation to different awards | 5 |
of shares. | |
(5) Any amount deducted in excess of that allowed by sub-paragraph (1) or (2), | |
or any lower limit in the plan, must be paid over to the employee as soon as | |
practicable. | |
Minimum amount of deductions | 10 |
47 (1) The plan may provide that the amount to be deducted under a partnership | |
share agreement in any month must not be less than a minimum amount | |
specified in the plan. | |
(2) The specified minimum amount must not be greater than £10. | |
(3) Sub-paragraphs (1) and (2) apply whatever the intervals at which the | 15 |
employee is paid may be. | |
Notice of possible effect of deductions on benefit entitlement | |
48 (1) The plan must provide that the company may not enter into a partnership | |
share agreement with an employee unless the agreement contains a notice | |
under this paragraph. | 20 |
(2) A notice under this paragraph is a notice in a prescribed form containing | |
prescribed information as to the possible effect of deductions on an | |
employee’s entitlement to social security benefits, statutory sick pay and | |
statutory maternity pay. | |
(3) In this paragraph “prescribed” means prescribed by regulations made by the | 25 |
Board of Inland Revenue. | |
Partnership share money held for employee | |
49 (1) The plan must provide that partnership share money deducted under a | |
partnership share agreement is— | |
(a) paid to the trustees as soon as practicable, and | 30 |
(b) held by them on behalf of the employee until such time as it is | |
applied by them in acquiring partnership shares on the employee’s | |
behalf. | |
(2) Sub-paragraph (1) is subject to paragraphs 50(5)(b) and 52(6)(b) and (7) | |
(obligations to pay money to the employee). | 35 |
(3) The plan must provide for the trustees to keep any money required to be | |
held by them under this paragraph in an account (interest bearing or | |
otherwise) with— | |
(a) a person falling within section 840A(1)(b) of ICTA (certain | |
institutions permitted to accept deposits), | 40 |
(b) a building society, or | |
(c) a firm falling within section 840A(1)(c) of ICTA (EEA firms | |
permitted to accept deposits). | |
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(4) The plan must provide for the trustees to account to an employee for the | |
interest if the partnership share money held on behalf of the employee is | |
held in an interest bearing account. | |
Application of money deducted where no accumulation periods | |
50 (1) If the plan does not provide for an accumulation period, it must provide for | 5 |
partnership share money to be applied by the trustees in acquiring | |
partnership shares on behalf of the employee on the acquisition date. | |
(2) The number of shares awarded to each employee must be determined in | |
accordance with the market value of the shares on the acquisition date. | |
(3) Sub-paragraphs (1) and (2) are subject to paragraph 53 (restriction on | 10 |
number of shares awarded). | |
(4) In those sub-paragraphs “the acquisition date” means the date set by the | |
trustees in relation to the award of partnership shares, which must be not | |
later than 30 days after the last date on which the partnership share money | |
to be applied in acquiring the shares was deducted. | 15 |
(5) Any surplus partnership share money remaining after the acquisition of | |
shares by the trustees— | |
(a) may with the agreement of the employee be carried forward and | |
added to the amount of the next deduction, and | |
(b) in any other case must be paid over to the employee as soon as | 20 |
practicable. | |
Accumulation periods | |
51 (1) The plan may provide for accumulation periods not exceeding 12 months. | |
(2) If the plan does so, the following provisions apply. | |
(3) The partnership share agreements— | 25 |
(a) must specify when each accumulation period begins and ends; | |
(b) may specify that an accumulation period comes to an end on the | |
occurrence of a specified event. | |
(4) However— | |
(a) the beginning of the first accumulation period must not be later than | 30 |
the date on which the first deduction of partnership share money is | |
made; and | |
(b) the accumulation period which applies in relation to each award of | |
partnership shares must be the same for all individuals entering into | |
the partnership share agreements. | 35 |
(5) The plan may also provide that if— | |
(a) during an accumulation period, a transaction occurs in relation to | |
any of the shares (“the original holding”) to be acquired under a | |
partnership share agreement which results in a new holding of | |
shares being equated with the original holding for the purposes of | 40 |
capital gains tax, and | |
(b) the employee consents, | |
the partnership share agreement is to have effect after the time of the | |
transaction as if it were an agreement for the purchase of the shares | |
comprised in the new holding. | 45 |
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Application of money deducted in accumulation period | |
52 (1) This paragraph applies if the plan provides for one or more accumulation | |
periods. | |
(2) The plan must provide for the partnership share money deducted in each | |
accumulation period under a partnership share agreement to be applied by | 5 |
the trustees in acquiring partnership shares on behalf of the employee on the | |
acquisition date. | |
(3) The number of shares awarded to each employee must be determined in | |
accordance with the lower of— | |
(a) the market value of the shares at the beginning of the accumulation | 10 |
period, and | |
(b) the market value of the shares on the acquisition date. | |
(4) Sub-paragraphs (2) and (3) are subject to sub-paragraphs (7) and (8) and to | |
paragraph 53 (restriction on number of shares awarded). | |
(5) In sub-paragraphs (2) and (3) “the acquisition date” means the date set by the | 15 |
trustees in relation to the award of partnership shares, which must be not | |
later than 30 days after the end of the accumulation period which applies in | |
relation to the award. | |
(6) Any surplus partnership share money remaining after the acquisition of | |
shares by the trustees— | 20 |
(a) may with the agreement of the employee be carried forward to the | |
next accumulation period, and | |
(b) in any other case must be paid over to the employee as soon as | |
practicable. | |
(7) The plan must provide that where the employee ceases to be in relevant | 25 |
employment during an accumulation period, any partnership share money | |
deducted in the period is to be paid over to the individual as soon as | |
practicable. | |
(8) The partnership share agreement may provide that, where an accumulation | |
period comes to an end on the occurrence of a specified event, the | 30 |
partnership share money deducted in that period must be paid over to the | |
individual as soon as practicable instead of being applied in acquiring | |
shares. | |
Restriction on number of shares awarded | |
53 (1) The plan may authorise the company to specify the maximum number of | 35 |
shares (“the award maximum”) to be included in an award of partnership | |
shares. | |
(2) If the plan does so— | |
(a) a different number may be specified by the company in relation to | |
different awards, and | 40 |
(b) the following provisions apply to the plan. | |
(3) The plan must require partnership share agreements to contain an | |
undertaking by the company to notify the employee of any restriction on the | |
number of shares to be included in an award. | |
(4) The plan must require the notice to be given— | 45 |
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(a) if there is no accumulation period, before the deduction of the | |
partnership share money relating to the award, and | |
(b) if there is an accumulation period, before the beginning of the | |
accumulation period relating to the award. | |
(5) The plan must provide that, where the award maximum in respect of an | 5 |
award of partnership shares is smaller than the number of shares which | |
would otherwise be included in the award, the number of partnership | |
shares acquired on behalf of each employee under paragraph 50(1) or 52(2) | |
must be reduced proportionately. | |
Stopping and re-starting deductions | 10 |
54 (1) The plan must provide that an employee may at any time give notice to the | |
company to stop deductions under a partnership share agreement. | |
(2) The plan must provide that, unless a later date is specified in the notice, the | |
company must, on receiving a notice within sub-paragraph (1), ensure | |
within 30 days after receipt of the notice that no further deductions are made | 15 |
by it under the partnership share agreement. | |
(3) The plan must also provide that an employee who has stopped deductions— | |
(a) may subsequently give notice to the company to re-start deductions | |
under the agreement, but | |
(b) may not make up deductions that have been missed. | 20 |
(4) If the plan makes provision for one or more accumulation periods, it may | |
prevent an employee re-starting deductions more than once in any | |
accumulation period. | |
(5) The plan must provide that, unless a later date is specified in the notice, the | |
company must, on receiving a notice within sub-paragraph (3), re-start | 25 |
deductions under the partnership share agreement not later than the re-start | |
date. | |
(6) “The re-start date” means the date of the first deduction due under the | |
partnership share agreement more than 30 days after receipt of the notice | |
under sub-paragraph (3). | 30 |
(7) In this paragraph “notice” means notice in writing. | |
Withdrawal from partnership share agreement | |
55 (1) The plan must provide that an employee may at any time give notice to the | |
company of the employee’s withdrawal from a partnership share | |
agreement. | 35 |
(2) The plan must provide that, unless a later date is specified in the notice, a | |
notice of withdrawal takes effect 30 days after it is received by the company. | |
(3) The plan must provide that, where an employee withdraws from a | |
partnership share agreement, any partnership share money held on behalf | |
of the employee is to be paid over to the employee as soon as practicable. | 40 |
(4) In this paragraph “notice” means notice in writing. | |
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Repayment of partnership share money on withdrawal of approval or termination | |
56 (1) The plan must provide that, where the approval of the plan is withdrawn | |
(see paragraph 83), any partnership share money held on behalf of an | |
employee is to be paid over to the employee. | |
(2) The plan must require the payment to be made as soon as practicable after | 5 |
notice of the withdrawal of approval is given to the company. | |
(3) The plan must provide that, where a plan termination notice is issued in | |
respect of the plan (see paragraph 90), any partnership share money held on | |
behalf of an employee is to be paid over to the employee. | |
(4) The plan must require the payment to be made as soon as practicable after | 10 |
the plan termination notice is notified to the trustees under paragraph 89(2). | |
Access to partnership shares | |
57 (1) The plan must provide that when partnership shares have been awarded to | |
an employee, the employee may at any time withdraw any or all of the | |
partnership shares from the plan. | 15 |
(2) If the employee does so, there may be a charge to tax by virtue of section 506 | |
(charge on partnership shares ceasing to be subject to plan). | |
Part 7 | |
Matching shares | |
Matching shares: introduction | 20 |
58 If a SIP provides for matching shares it must meet the plan requirements | |
contained in— | |
paragraph 59 (general requirements for matching shares), | |
paragraph 60 (ratio of matching shares to partnership shares), and | |
paragraph 61 (holding period for matching shares). | 25 |
General requirements for matching shares | |
59 (1) The plan must provide for the matching shares to be— | |
(a) shares of the same class and carrying the same rights as the | |
partnership shares to which they relate; | |
(b) awarded on the same day as the partnership shares to which they | 30 |
relate are awarded; and | |
(c) awarded to all employees who participate in the award on exactly | |
the same basis. | |
(2) Sub-paragraph (1) is subject to paragraph 32 (permitted restrictions: | |
provision for forfeiture). | 35 |
Ratio of matching shares to partnership shares | |
60 (1) The partnership share agreement must specify— | |
(a) the ratio of matching shares to partnership shares for the time being | |
offered by the company, and | |
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(b) the circumstances and manner in which the ratio may be changed by | |
the company. | |
(2) The ratio must not exceed 2:1 and must be applied by reference to the | |
number of shares. | |
(3) A partnership share agreement must provide for the employee to be | 5 |
informed by the company if the ratio offered by the company changes before | |
partnership shares are awarded to the employee under the agreement. | |
Holding period for matching shares | |
61 Paragraphs 36 and 37 (the holding period and related matters) apply in | |
relation to matching shares as they apply in relation to free shares. | 10 |
Part 8 | |
Cash dividends and dividend shares | |
Reinvestment of cash dividends | |
62 (1) A SIP may provide that, where the company so directs, the trustees must | |
apply all cash dividends in respect of plan shares held on behalf of— | 15 |
(a) all participants, or | |
(b) all participants who elect to reinvest their dividends, | |
in acquiring further shares on their behalf. | |
(2) Sub-paragraph (1) is subject to paragraph 63 (requirements to be met as | |
regards cash dividends). | 20 |
(3) In the SIP code— | |
(a) the application of cash dividends as mentioned in sub-paragraph (1) | |
is referred to as “reinvestment”; and | |
(b) the further plan shares acquired are referred to as “dividend shares”. | |
(4) The company may revoke a direction requiring the reinvestment of cash | 25 |
dividends. | |
(5) References in the SIP code to the trustees acquiring dividend shares on | |
behalf of a participant include their appropriating to a participant shares | |
already held by them. | |
Requirements to be met as regards cash dividends | 30 |
63 (1) If a SIP makes the provision authorised by paragraph 62(1) (reinvestment of | |
cash dividends), the following paragraphs apply— | |
paragraph 64 (limit on amount reinvested), | |
paragraph 65 (general requirements as to dividend shares), | |
paragraph 66 (acquisition of dividend shares), | 35 |
paragraph 67 (holding period for dividend shares), and | |
paragraph 68 (reinvestment: amounts to be carried forward). | |
(2) The plan must meet any plan requirements contained in those paragraphs. | |
(3) A SIP must in any event meet the plan requirement contained in paragraph | |
69 (cash dividends not required to be reinvested). | 40 |
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Limit on amount reinvested | |
64 (1) The plan must provide that the total dividend reinvestment in respect of a | |
participant must not exceed £1,500 in a tax year. | |
(2) For this purpose “the total dividend reinvestment” in respect of a participant | |
is the sum of— | 5 |
(a) the amount applied by the trustees in acquiring dividend shares on | |
behalf of the participant under the plan, and | |
(b) the amount applied in acquiring dividend shares on behalf of the | |
participant by the trustees of other approved SIPs that are | |
established by the company or an associated company. | 10 |
(3) If the amounts received by the trustees exceed the limit in sub-paragraph (1), | |
the plan must provide for the balance to be paid over to the participant as | |
soon as practicable. | |
General requirements as to dividend shares | |
65 The plan must provide that dividend shares are to be shares— | 15 |
(a) which are in the same company and of the same class, and carry the | |
same rights, as the shares in respect of which the dividend is paid, | |
and | |
(b) which are not subject to any provision for forfeiture. | |
Acquisition of dividend shares | 20 |
66 (1) The plan must provide that the trustees must treat participants fairly and | |
equally in exercising their powers in relation to the acquisition of dividend | |
shares. | |
(2) The plan must provide for the trustees to acquire dividend shares on behalf | |
of participants on the acquisition date. | 25 |
(3) The number of dividend shares acquired on behalf of each participant must | |
be determined in accordance with the market value of the shares on the | |
acquisition date. | |
(4) In this paragraph “the acquisition date” means the date set by the trustees | |
for the acquisition of dividend shares and falling not later than 30 days after | 30 |
the dividend is received by them. | |
Holding period for dividend shares | |
67 Paragraphs 36 and 37 (the holding period and related matters) apply in | |
relation to dividend shares as they apply in relation to free shares, except | |
that the holding period must be 3 years. | 35 |
Reinvestment: amounts to be carried forward | |
68 (1) This paragraph applies where an amount is not reinvested— | |
(a) because the amount of the cash dividend to which the participant is | |
entitled is not sufficient to acquire a share, or | |
(b) because there is an amount remaining after acquiring one or more | 40 |
dividend shares on the participant’s behalf. | |
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