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Schedule 21 | |
Section 138 | |
Approved share plans and schemes | |
Part 1 | |
Share incentive plans | |
Introductory | 5 |
1 Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 (c. 1) | |
(approved share incentive plans) is amended as follows. | |
Participation in more than one connected plan in a tax year | |
2 After paragraph 18 insert— | |
“Participation in more than one connected SIP in a tax year | 10 |
18A (1) The plan must provide that, if an individual participates in an | |
award of shares under the plan in a tax year in which he has | |
already participated in an award of shares under one or more | |
other approved SIPs established by the company or a connected | |
company— | 15 |
(a) paragraph 35 (maximum annual award of free shares), | |
(b) paragraph 46 (maximum amount of partnership share | |
money deductions), and | |
(c) paragraph 64 (limit on amount reinvested), | |
apply as if the plan and the other plan or plans were a single plan. | 20 |
(2) In this paragraph “connected company” has the same meaning as | |
in paragraph 18.”. | |
3 In paragraph 13 (eligibility of individuals: introduction), for the entry | |
relating to paragraph 18 substitute— | |
“paragraph 18 (requirement not to participate | 25 |
simultaneously in connected SIPs), | |
paragraph 18A (successive participation in connected SIPs), | |
and”. | |
4 In paragraph 14(7) (eligibility to participate dependent on certain | |
requirements of plan being met), for paragraph (b) substitute— | 30 |
“(b) not participating simultaneously in connected SIPs (see | |
paragraph 18), | |
(ba) successive participation in connected SIPs (see paragraph | |
18A), and”. | |
5 In paragraph 18 (requirement not to participate in connected SIPs), omit sub- | 35 |
paragraph (1)(a) (successive participation in connected SIPs). | |
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6 After paragraph 71 insert— | |
“Duty to monitor participants in connected schemes | |
71A The trust instrument must require the trustees to maintain records | |
of participants who have participated in one or more other | |
approved SIPs established by the company or a connected | 5 |
company.”. | |
Partnership shares | |
7 (1) Paragraph 46 (maximum amount of partnership share money deductions) is | |
amended as follows. | |
(2) In sub-paragraph (1), for the words after “must not exceed” substitute | 10 |
“£1,500 in any tax year.”. | |
(3) In sub-paragraph (2), for the words after “an employee’s salary” substitute | |
“for any tax year must not exceed 10% of the employee’s salary for the tax | |
year.”. | |
(4) After that sub-paragraph insert— | 15 |
“(4A) A limit lower than that specified in sub-paragraph (2) may be | |
framed— | |
(a) as a proposition substituting a percentage lower than that | |
so specified, or | |
(b) as a proposition that a particular description of earnings is | 20 |
not to be regarded as forming part of an employee’s salary | |
for the purposes of that sub-paragraph.”. | |
(5) Sub-paragraphs (2) and (3) have effect for the year 2003-04 and subsequent | |
years of assessment. | |
8 In paragraph 47 (minimum amount of deductions)— | 25 |
(a) for “in any month” substitute “on any occasion”, and | |
(b) omit sub-paragraph (3). | |
Dividend shares | |
9 In paragraph 67 (holding period for dividend shares), for “must be 3 years” | |
substitute “is the period— | 30 |
(a) beginning with the date on which the dividend shares are | |
acquired, and | |
(b) ending with the period of 5 years starting with the date of the | |
award of the shares in respect of which the dividend applied | |
to acquire the dividend shares was paid”. | 35 |
10 In paragraph 80(5) (meaning of “relevant dividend” for purposes of | |
provisions about information to be provided)— | |
(a) for “period of 3 years beginning with the date on which they were | |
acquired on a participant’s behalf” substitute “holding period”, and | |
(b) for “the participant’s” substitute “a participant’s”. | 40 |
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11 In paragraph 100 (index of defined expressions), in the entry relating to | |
“holding period”, for the words in the second column substitute | |
“paragraphs 36 and 67”. | |
12 In section 68B(2) of the Taxes Act 1988 (charge on dividend shares ceasing to | |
be subject to plan: foreign cash dividends), for “period of three years | 5 |
beginning with the date on which the shares were acquired on the | |
participant’s behalf” substitute “holding period”. | |
13 In section 251C(1) of the Taxes Act 1988 (charge on dividend shares ceasing | |
to be subject to plan), for “period of three years beginning with the date on | |
which the shares were acquired on the participant’s behalf” substitute | 10 |
“holding period”. | |
14 In section 501(3)(b) of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) | |
(charge on capital receipts in respect of plan shares), for the words after | |
“dividend shares” substitute “in respect of, or by reference to, which the | |
capital receipt is received before the end of the holding period.”. | 15 |
15 Paragraphs to 9 to 14 have effect in relation to dividend shares acquired on | |
or after the day on which this Act is passed. | |
Part 2 | |
SAYE option schemes | |
Introductory | 20 |
16 Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003 (approved | |
SAYE option schemes) is amended as follows. | |
Minor correction | |
17 In paragraph 25(3)(a) (limit on contributions under CCS schemes linked to | |
approved SAYE schemes), after “SAYE” insert “option”. | 25 |
Exercise of options: scheme-related employment ends because of change of control or transfer | |
18 (1) Paragraph 34 (exercise of options: scheme-related employment ends) is | |
amended as follows. | |
(2) In sub-paragraph (2)(a), after “1996” insert “or ER(NI)O 1996”. | |
(3) In sub-paragraph (5)— | 30 |
(a) for “provide that,” substitute “make provision about the time when | |
the options may be exercised”, and | |
(b) omit the words following paragraph (b). | |
(4) After that sub-paragraph insert— | |
“(5A) If the scheme makes provision by virtue of sub-paragraph (5), the | 35 |
provision must be either— | |
(a) that the options may be exercised within 6 months after the | |
termination date, or | |
(b) that the options may be exercised within 6 months after the | |
date (if any) when P ceases to hold the employment which | 40 |
(before the termination date) was the scheme-related | |
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employment for a reason within sub-paragraph (2)(a) or | |
(b).”. | |
Alteration of schemes | |
19 (1) Paragraph 42 (withdrawal of approval) is amended as follows. | |
(2) In sub-paragraph (2), after “to be met;” insert— | 5 |
“(aa) an alteration is made in a key feature of the scheme | |
without the approval of the Inland Revenue;”. | |
(3) After that sub-paragraph insert— | |
“(2A) For the purposes of sub-paragraph (2)(aa) the Inland Revenue | |
may not withhold their approval unless it appears to them at the | 10 |
time in question that the scheme as proposed to be altered would | |
not then be approved on an application under paragraph 40. | |
(2B) For the purposes of that sub-paragraph a “key feature” of a scheme | |
is a provision of the scheme which is necessary in order to meet the | |
requirements of this Schedule.”. | 15 |
(4) For paragraph 43 (approval ineffective after unapproved alteration and | |
notice of decisions) and the heading before it substitute— | |
“Notice of decision about alteration | |
43 Where the Inland Revenue— | |
(a) have been requested to approve any alteration in a SAYE | 20 |
option scheme that has been approved, and | |
(b) have decided whether or not to approve the alteration, | |
they must give notice of their decision to the scheme organiser.”. | |
(5) For paragraph 44(1)(b) (appeal against decision not to approve alteration) | |
substitute— | 25 |
“(b) decide to refuse approval under paragraph 42(2)(aa).”. | |
Part 3 | |
CSOP schemes | |
Introductory | |
20 The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as | 30 |
follows. | |
Exercise of options: exclusion of income tax liability | |
21 (1) Section 524 (no charge in respect of exercise of option under CSOP scheme) | |
is amended as follows. | |
(2) For subsection (1)(b) substitute— | 35 |
“(b) Condition A or B is met.”. | |
(3) For subsections (2) and (3) substitute— | |
“(2) Condition A is that the option is exercised— | |
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(a) on or after the third anniversary of the date on which it was | |
granted, but | |
(b) not later than the tenth anniversary of that date. | |
(2A) Condition B is that the option— | |
(a) is exercised before the third anniversary of the date on which | 5 |
it was granted, and | |
(b) is so exercised by virtue of a provision included in the scheme | |
under paragraph 24 of Schedule 4 (exercise of options after | |
ceasing to be director or employee) in circumstances in which | |
subsection (2B) applies. | 10 |
(2B) This subsection applies if the individual exercising the option— | |
(a) has ceased to be a full-time director or qualifying employee | |
of the scheme organiser (or, in the case of a group scheme, a | |
constituent company) because of injury, disability, | |
redundancy or retirement, and | 15 |
(b) exercises the option within 6 months of the day on which he | |
ceases to be such a director or employee. | |
(2C) In subsection (2B)— | |
“redundancy” means redundancy within the meaning of ERA | |
1996 or ER(NI)O 1996, and | 20 |
“retirement” means retirement on or after reaching a retirement | |
age specified in the scheme.”. | |
(4) For section 525(1)(b) (no charge in respect of post-acquisition benefits) | |
substitute— | |
“(b) Condition A or B (as set out in section 524(2) or (2A)) is met.”. | 25 |
(5) This paragraph has effect in relation to any exercise of an option on or after | |
9th April 2003. | |
22 (1) Schedule 4 (approved CSOP schemes) is amended as follows. | |
(2) After paragraph 35 insert— | |
“Retirement age | 30 |
35A A retirement age specified in a CSOP scheme— | |
(a) must be the same for men and women, and | |
(b) must not be less than 55.”. | |
Meaning of “material interest” | |
23 (1) In paragraphs 10(2) and (3), 11(3) and (4) and 13(2) (material interest), for | 35 |
“10%” substitute “25%”. | |
(2) This paragraph has effect for the purpose of determining whether a person | |
is eligible to participate in a scheme on the date on which this Act is passed | |
or any later date (by altering what constitutes a material interest on that date | |
and within the 12 months preceding that date). | 40 |
Alteration of schemes | |
24 (1) Paragraph 30 (withdrawal of approval) is amended as follows. | |
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(2) In sub-paragraph (2), after “to be met;” insert— | |
“(aa) an alteration is made in a key feature of the scheme | |
without the approval of the Inland Revenue;”. | |
(3) After that sub-paragraph insert— | |
“(3) For the purposes of sub-paragraph (2)(aa) the Inland Revenue | 5 |
may not withhold their approval unless it appears to them at the | |
time in question that the scheme as proposed to be altered would | |
not then be approved on an application under paragraph 28. | |
(4) For the purposes of that sub-paragraph a “key feature” of a scheme | |
is a provision of the scheme which is necessary in order to meet the | 10 |
requirements of this Schedule.”. | |
(4) For paragraph 31 (approval ineffective after unapproved alteration and | |
notice of decisions) and the heading before it substitute— | |
“Notice of decision about alteration | |
31 Where the Inland Revenue— | 15 |
(a) have been requested to approve any alteration in a CSOP | |
scheme that has been approved, and | |
(b) have decided whether or not to approve the alteration, | |
they must give notice of their decision to the scheme organiser.”. | |
(5) For paragraph 32(1)(b) (appeal against decision not to approve alteration) | 20 |
substitute— | |
“(b) decide to refuse approval under paragraph 30(2)(aa).”. | |
PAYE | |
25 (1) Section 701(2)(c) (PAYE: exclusions from meaning of “asset”) is amended as | |
follows. | 25 |
(2) In sub-paragraph (i), omit “or 4 (approved CSOP schemes)”. | |
(3) After that sub-paragraph insert— | |
“(ia) 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 4 | 30 |
(approved CSOP schemes), other than shares | |
acquired as a result of the exercise of the right before | |
the third anniversary of the date on which it was | |
granted or later than the tenth anniversary of that | |
date;”. | 35 |
(4) In sub-paragraph (ii), for “such a scheme” substitute “a scheme such as is | |
mentioned in sub-paragraph (i) or (ia)”. | |
(5) This paragraph has effect in relation to shares acquired on or after 9th April | |
2003. | |
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