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“(4B) This subsection applies to earnings and amounts treated as earnings | |
for a year of assessment if— | |
(a) the employee or office-holder is not domiciled in the United | |
Kingdom in that year, and | |
(b) the employment is with a foreign employer. | 5 |
(4C) If there is a dispute as to whether the employee or office-holder is not | |
domiciled in the United Kingdom, sections 42 and 43 of ITEPA 2003 | |
(Board to determine dispute as to domicile) apply to the dispute as | |
they apply to a dispute mentioned in section 42(1) of that Act. | |
(4D) In this section— | 10 |
“earnings and amounts treated as earnings” means earnings | |
and amounts treated as earnings which constitute | |
employment income (see section 7(2)(a) or (b) of ITEPA 2003); | |
“foreign employer” has the meaning given by section 721 of | |
ITEPA 2003.” | 15 |
94 In section 646(2) (meaning of “net relevant earnings”) for paragraph (b) | |
substitute— | |
“(b) deductions made by virtue of section 232, 336, 343, 344 or | |
351 of ITEPA 2003 (mileage allowance, expenses, | |
professional membership fees, annual subscriptions, | 20 |
ministers of religion); | |
(ba) travelling or subsistence expenses deducted by virtue of | |
Part 5 of that Act; | |
(bb) deductions made by virtue of section 332(3) of this Act;”. | |
95 (1) Amend section 646A (earnings from associated employments) as follows. | 25 |
(2) In subsection (2) for “emoluments” substitute “general earnings”. | |
(3) In subsection (3) for “emoluments” substitute “general earnings”. | |
96 Omit sections 647 to 648A (personal pensions: unauthorised payments, | |
contributions under unapproved arrangements and annuities). | |
97 In section 657(2)(f)(i) (purchased life annuities to which section 656 applies) | 30 |
for “section 596(1)” substitute “section 387(2) of ITEPA 2003 (meaning of | |
non-approved retirement benefits scheme)”. | |
98 In section 658A(1) (charges and assessments on administrators) after “this | |
Part” insert “or under section 394(2) of ITEPA 2003 (benefits from non- | |
approved pension schemes)”. | 35 |
99 (1) Amend section 659B (definition of insurance company) as follows. | |
(2) For subsection (9)(a) substitute— | |
“(a) any duty to pay under PAYE regulations tax charged under | |
Part 9 of ITEPA 2003 (pension income) because section 580 of | |
that Act applies (approved retirement benefits schemes: | 40 |
pensions and annuities);”; | |
(3) In subsection (9)(c) after “section 605” insert “of this Act or section 589 of | |
ITEPA 2003”. | |
(4) For subsection (9)(d) substitute— | |
“(d) any duty to pay under PAYE regulations tax charged under | 45 |
Part 9 of ITEPA 2003 (pension income) because section 595 of | |
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|
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| |
that Act applies (approved personal pension schemes: | |
annuities).”. | |
100 After section 686A insert— | |
“686B Share incentive plans: distributions in respect of unappropriated | |
shares | 5 |
(1) This section applies to income of the trustees of an approved share | |
incentive plan consisting of dividends or other distributions in | |
respect of shares held by them 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. | 10 |
(2) Income to which this section applies is income to which section 686 | |
applies only if and when— | |
(a) the period applicable to the shares under the following | |
provisions of this section comes to an end without the shares | |
being awarded to a participant in accordance with the plan, | 15 |
or | |
(b) if earlier, the shares are disposed of by the trustees. | |
(3) 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 period applicable to the shares is the period of two years | 20 |
beginning with the date on which the shares were acquired by the | |
trustees. | |
This is subject to subsection (5). | |
(4) 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, | 25 |
the period applicable to the shares is— | |
(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 | 30 |
beginning with the date on which they did so, | |
whichever ends first. | |
This is subject to subsection (5). | |
(5) 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 | 35 |
Schedule 4AA (deduction for contribution to plan trust), the period | |
applicable to the shares is the period of ten years beginning with the | |
date of acquisition. | |
(6) For the purposes of determining whether shares are awarded to a | |
participant within the period applicable under the above provisions, | 40 |
shares acquired by the 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. | |
(7) For the purposes of this section shares which are subject to provision | |
for forfeiture are treated as acquired by the trustees if and when the | 45 |
forfeiture occurs. | |
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(8) In relation to shares acquired by the trustees before 11th May 2001 | |
this section has effect with the substitution— | |
(a) in subsection (3), of “Subject to subsection (4)” for the words | |
before “the period applicable”, and | |
(b) in subsection (4)(b), of “the shares in question” for “any of the | 5 |
shares in that company”. | |
686C Interpretation of section 686B | |
(1) Section 686B and this section form part of the SIP code (see section | |
488 of ITEPA 2003 (approved share incentive plans)). | |
(2) Accordingly, expressions used in section 686B or this section and | 10 |
contained in the index at the end of Schedule 2 to that Act (approved | |
share incentive plans) have the meaning indicated by that index. | |
(3) References in section 686B to shares being awarded to a participant | |
include references to the shares being acquired on behalf of the | |
participant as dividend shares. | 15 |
(4) In section 686B, “readily convertible assets” has the meaning given | |
by sections 701 and 702 of ITEPA 2003, but this is subject to | |
subsection (5). | |
(5) In determining for the purposes of section 686B whether shares are | |
readily convertible assets, any market for the shares that— | 20 |
(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, | |
shall be disregarded.” | |
101 In section 779(13)(e) (sale and lease-back: limitation on tax reliefs), for “a | 25 |
deduction from emoluments to be assessed under Schedule E made in | |
pursuance of section 198(1)” substitute “a deduction from earnings allowed | |
under section 336 of ITEPA 2003 (expenses)”. | |
102 In section 781(4)(d) (assets leased to traders and others), for “a deduction | |
from emoluments to be assessed under Schedule E made in pursuance of | 30 |
section 198(1)” substitute “a deduction from earnings allowed under section | |
336 of ITEPA 2003 (expenses)”. | |
103 In section 794(2)(b) (requirements as to residence) for “income tax | |
chargeable under Schedule E” substitute “income tax on employment | |
income”. | 35 |
104 In section 824(4A) (repayment supplement: individuals and others) for | |
“section 203” substitute “PAYE regulations”. | |
105 (1) Amend section 828 (orders and regulations made by the Treasury or the | |
Board) as follows. | |
(2) In subsection (1), for “subsection (2)” substitute “subsections (2) and (5)”. | 40 |
(3) In subsection (3), for “subsection (4)” substitute “subsections (4) and (5)”. | |
(4) At the end add— | |
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“(5) Nothing in this section applies in relation to any of the following (in | |
relation to which section 717 of ITEPA 2003 applies)— | |
(a) any power of the Treasury or the Board to make any order or | |
regulations under ITEPA 2003; | |
(b) any statutory instrument containing any order or regulations | 5 |
made by the Treasury or the Board under that Act.” | |
106 In section 830 (territorial sea and designated areas) omit subsection (5). | |
107 In section 831(3) (interpretation of ICTA) before the entry relating to “the | |
Management Act” insert— | |
““ITEPA 2003” means the Income Tax (Earnings and Pensions) Act | 10 |
2003;”. | |
108 (1) Amend section 833 (interpretation of Income Tax Acts) as follows. | |
(2) For subsection (3)(a) substitute— | |
“(a) any payment or other benefit charged to tax under Chapter 3 | |
of Part 6 of ITEPA 2003 (payments and other benefits on | 15 |
termination of employment);”. | |
(3) For subsection (4)(a) and (b) substitute— | |
“(a) any income charged to tax under ITEPA 2003 except— | |
(i) payments that meet the conditions in section 623 of | |
that Act (return of surplus employee additional | 20 |
voluntary contributions); and | |
(ii) jobseeker’s allowance (to which Chapter 3 of Part 10 | |
of that Act applies); | |
(b) any income from any property which is attached to or forms | |
part of the general earnings from any employment;”. | 25 |
(4) For paragraphs (a) to (e) of subsection (5) substitute “income which is earned | |
income by virtue of section 529”. | |
109 After Schedule 4 insert— | |
“SCHEDule 4AA | |
Section 85B | |
Share incentive plans: corporation tax deductions | 30 |
Introductory | |
1 (1) This Schedule forms part of the SIP code (see section 488 of ITEPA | |
2003 (approved share incentive plans)). | |
(2) Accordingly, expressions used in this Schedule and contained in | |
the index at the end of Schedule 2 to that Act (approved share | 35 |
incentive plans) have the meaning indicated by that index. | |
(3) References in this Schedule to deductions are to deductions by a | |
company in calculating for the purposes of corporation tax the | |
profits of a trade carried on by it. | |
(4) Sub-paragraph (3) is subject to paragraph 13 (application of | 40 |
provisions to expenses of management of investment companies | |
etc.). | |
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| |
Deduction for providing free or matching shares | |
2 (1) Where, under an approved share incentive plan, shares are | |
awarded to employees as free or matching shares by reason of | |
their employment with a company, a deduction is allowed under | |
this paragraph to that company. | 5 |
(2) Any such deduction— | |
(a) is of an amount equal to the market value of the shares at | |
the time they are acquired by the trustees, and | |
(b) must be made for the period of account in which the shares | |
are awarded to employees in accordance with the plan. | 10 |
(3) Except as provided by sub-paragraph (1), no deduction may be | |
made by the company or any associated company in respect of the | |
provision of those shares. | |
This is subject to paragraphs 7 and 8 (deductions for costs of | |
setting up, and contributions to running expenses of, plan). | 15 |
(4) Where the shares are awarded under a group plan, the market | |
value of the shares at the time they are acquired by the trustees | |
shall for the purposes of this paragraph be taken to be the relevant | |
proportion of the total market value of the shares included in the | |
award. | 20 |
(5) For the purposes of sub-paragraph (4) “the relevant proportion” | |
means the proportion that the number of shares in the award | |
awarded to the employees of the company concerned bears to the | |
total number of shares in the award. | |
(6) In determining the market value of any shares for the purposes of | 25 |
this paragraph, if shares have been acquired by the trustees on | |
different days it shall be assumed that those acquired on an earlier | |
day are awarded to employees under the plan before those | |
acquired by the trustees on a later day. | |
(7) If a deduction is made under this paragraph by a company, no | 30 |
deduction may be made by any other company under this | |
paragraph in respect of the provision of the shares. | |
(8) This paragraph has effect subject to paragraph 4 (cases in which no | |
deduction is allowed). | |
Deduction for additional expenses in providing partnership shares | 35 |
3 (1) Where under an approved share incentive plan— | |
(a) partnership shares are awarded to employees by reason of | |
their employment with a company, and | |
(b) the market value of those shares at the time they are | |
acquired by the trustees exceeds the partnership share | 40 |
money paid by the participants to acquire those shares, | |
a deduction is allowed under this paragraph to that company. | |
(2) Any such deduction— | |
(a) is of an amount equal to the amount of the excess referred | |
to in sub-paragraph (1)(b), and | 45 |
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| |
(b) must be made for the period of account in which the shares | |
are awarded to employees in accordance with the plan. | |
(3) Except as provided by sub-paragraph (1), no deduction may be | |
made by that company or any associated company in respect of | |
the provision of those shares. | 5 |
This is subject to paragraphs 7 and 8 (deductions for costs of | |
setting up, and contributions to running expenses of, plan). | |
(4) If a deduction is made under this paragraph by a company, no | |
deduction may be made by any other company under this | |
paragraph in respect of the provision of the shares. | 10 |
(5) This paragraph has effect subject to paragraph 4 (cases in which no | |
deduction is allowed). | |
Cases in which no deduction is allowed | |
4 (1) No deduction is allowed under paragraph 2 or 3 (deductions for | |
providing free or matching shares or for additional expenses in | 15 |
providing partnership shares) in the following cases. | |
(2) No deduction is allowed in respect of shares awarded to an | |
individual under the plan unless, at the time of the award, any | |
earnings from the required employment are (or would be) | |
chargeable earnings. | 20 |
(3) In sub-paragraph (2)— | |
“chargeable earnings” means general earnings to which any | |
of the charging provisions of Chapter 4 or 5 of Part 2 of | |
ITEPA 2003 apply, and | |
the “required employment” means the employment by | 25 |
reference to which the individual is eligible to participate | |
in the award. | |
(4) In sub-paragraph (3), the reference to any of the charging | |
provisions of Chapter 4 or 5 of Part 2 of that Act has the same | |
meaning as it has in the employment income Parts of ITEPA 2003 | 30 |
(see sections 14(3) and 20(3) of that Act). | |
(5) No deduction is allowed in respect of shares that are liable to | |
depreciate substantially in value for reasons that do not apply | |
generally to shares in the company. | |
(6) No deduction is allowed if a deduction has been made— | 35 |
(a) by the company, or | |
(b) by an associated company of the company, | |
in respect of the provision of the same shares for this or another | |
trust. | |
(7) Sub-paragraph (6) applies whatever the nature or purpose of the | 40 |
other trust and whatever the basis on which the deduction was | |
made. | |
(8) For the purposes of determining whether the same shares have | |
been provided to more than one trust, if shares have been acquired | |
by the trustees of the plan trust on different days it shall be | 45 |
assumed that those acquired on an earlier day are awarded under | |
the plan before those acquired by the trustees on a later day. | |
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(9) No deduction is allowed in respect of the award of shares acquired | |
by the trustees by virtue of a payment in respect of which a | |
deduction has been made under paragraph 9 (deduction for | |
contribution to plan trust) or 10(3) (further deduction where | |
deduction under paragraph 9 withdrawn). | 5 |
No deduction for expenses in providing dividend shares | |
5 (1) No deduction is allowed for expenses in providing shares that are | |
acquired on behalf of individuals under an approved share | |
incentive plan as dividend shares. | |
(2) This is subject to paragraph 8 (deductions for contributions to | 10 |
running expenses of plan). | |
Treatment of forfeited shares | |
6 (1) This paragraph applies if any of a participant’s plan shares are | |
forfeited. | |
(2) The shares are treated for the purposes of this Schedule as | 15 |
acquired by the trustees— | |
(a) when the forfeiture occurs, and | |
(b) for no consideration. | |
(3) No deduction is allowed under paragraph 2 or 3 (deductions for | |
providing free or matching shares or for additional expenses in | 20 |
providing partnership shares) in respect of any subsequent award | |
of those shares under the plan. | |
Deduction for costs of setting up the plan | |
7 (1) A deduction is allowed under this paragraph for expenses | |
incurred by a company in establishing a share incentive plan | 25 |
which is approved by the Inland Revenue. | |
(2) No deduction may be made under this paragraph if— | |
(a) any employee acquires rights under the plan, or | |
(b) the trustees acquire any shares for the purposes of the plan, | |
before the Inland Revenue approve the plan. | 30 |
(3) If Inland Revenue approval of the plan is given more than nine | |
months after the end of the period of account in which the | |
expenses are incurred, the expenses are treated for the purposes of | |
this paragraph as incurred in the period in which the approval is | |
given. | 35 |
(4) No other deduction is allowed in respect of expenses for which a | |
deduction is allowed under this paragraph. | |
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 | 40 |
trustees in operating an approved share incentive plan. | |
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