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Schedule 22 | |
Section 139 | |
Employee securities and options | |
Introductory | |
1 The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as | |
follows. | 5 |
Main provisions | |
2 (1) For Chapter 1 of Part 7 (and the heading of that Part) substitute— | |
“Employment income: income and exemptions relating to securities | |
Chapter 1 | |
Introduction | 10 |
General | |
417 Scope of Part 7 | |
(1) This Part contains special rules about cases where securities, | |
interests in securities or securities options are acquired in connection | |
with an employment. | 15 |
(2) The rules are contained in— | |
Chapter 2 (restricted securities), | |
Chapter 3 (convertible securities), | |
Chapter 3A (securities with artificially depressed market | |
value), | 20 |
Chapter 3B (securities with artificially enhanced market value), | |
Chapter 3C (securities acquired for less than market value), | |
Chapter 3D (securities disposed of for more than market value), | |
Chapter 4 (post-acquisition benefits from securities), | |
Chapter 5 (securities options), | 25 |
Chapter 6 (approved share incentive plans), | |
Chapter 7 (approved SAYE option schemes), | |
Chapter 8 (approved CSOP schemes), | |
Chapter 9 (enterprise management incentives), and | |
Chapter 10 (priority share allocations). | 30 |
(3) The following make provision for amounts to count as employment | |
income— | |
Chapters 2 to 6, and | |
Chapter 8. | |
(4) The following make provision for exemptions and reliefs from | 35 |
income tax— | |
Chapters 2 and 3, and | |
Chapters 5 to 10. | |
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(5) Chapter 11 contains supplementary provisions relating to employee | |
benefit trusts. | |
(6) Section 5(1) (application of employment income Parts to office- | |
holders generally) does not apply to Chapters 6 to 10; and section | |
549(5) makes provision about its application to Chapter 11. | 5 |
418 Other related provisions | |
(1) In Part 3— | |
Chapter 1 (earnings), and | |
Chapter 10 (taxable benefits: residual liability to charge), | |
may also have effect in relation to securities and interests in | 10 |
securities (but not securities options). | |
(2) Part 7 of Schedule 7 (transitional provisions relating to securities and | |
securities options) may also be relevant. | |
(3) In view of section 49 of FA 2000 (phasing out of APS schemes) the | |
following are not rewritten in this Act and continue in force | 15 |
unaffected by the repeals made by this Act— | |
section 186 of ICTA (APS schemes) and section 187 of that Act | |
(interpretation) so far as relating to APS schemes, and | |
Schedule 9 to ICTA (approval of share schemes) so far as | |
relating to APS schemes and Schedule 10 to that Act (further | 20 |
provisions about APS schemes). | |
“APS schemes” means profit sharing schemes approved under | |
Schedule 9 to ICTA. | |
(4) Sections 138 to 140 of ICTA (share acquisitions by directors and | |
employees) continue to apply in relation to shares or interests in | 25 |
shares acquired before 26th October 1987 (see paragraph 57 of | |
Schedule 7). | |
419 Negative amounts treated as nil | |
If the result given by any formula under any provision of this Part | |
would otherwise be a negative amount, the result is to be taken to be | 30 |
nil instead. | |
Interpretation of Chapters 1 to 5 | |
420 Meaning of “securities” etc | |
(1) Subject to subsections (5) and (6), for the purposes of this Chapter | |
and Chapters 2 to 5 the following are “securities”— | 35 |
(a) shares in any body corporate (wherever incorporated) or in | |
any unincorporated body constituted under the law of a | |
country or territory outside the United Kingdom, | |
(b) debentures, debenture stock, loan stock, bonds, certificates of | |
deposit and other instruments creating or acknowledging | 40 |
indebtedness, | |
(c) warrants and other instruments entitling their holders to | |
subscribe for securities (whether or not in existence or | |
identifiable), | |
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(d) certificates and other instruments conferring rights in respect | |
of securities held by persons other than the persons on whom | |
the rights are conferred and the transfer of which may be | |
effected without the consent of those persons, | |
(e) units in a collective investment scheme, | 5 |
(f) futures, and | |
(g) rights under contracts for differences or contracts similar to | |
contracts for differences. | |
(2) In subsection (1)(e) “collective investment scheme” means | |
arrangements— | 10 |
(a) which are made with respect to property of any description, | |
including money, and | |
(b) the purpose or effect of which is to enable persons taking part | |
in the arrangements (whether by becoming owners of the | |
property or any part of it or otherwise) to participate in or | 15 |
receive profits or income arising from the acquisition, | |
holding, management or disposal of the property or sums | |
paid out of such profits or income. | |
(3) In subsection (1)(f) “futures” means rights under a contract for the | |
sale of a commodity or other property under which delivery is to be | 20 |
made at a future date at a price agreed when the contract is made; | |
and for this purpose a price is to be taken to be agreed when the | |
contract is made— | |
(a) if it is left to be determined by reference to the price at which | |
a contract is to be entered into on a market or exchange or | 25 |
could be entered into at a time and place specified in the | |
contract, and | |
(b) in a case where the contract is expressed to be by reference to | |
a standard lot and quality, even if provision is made for a | |
variation in the price to take account of any variation in | 30 |
quantity or quality on delivery. | |
(4) For the purposes of subsection (1)(g) a contract similar to a contract | |
for differences is a contract— | |
(a) which is not a contract for differences, but | |
(b) the purpose or pretended purpose of which is to secure a | 35 |
profit or avoid a loss by reference to fluctuations in the value | |
or price of property or an index or other factor designated in | |
the contract. | |
(5) The following are not “securities” for the purposes of this Chapter or | |
Chapters 2 to 5— | 40 |
(a) cheques and other bills of exchange, bankers’ drafts and | |
letters of credit (other than bills of exchange accepted by a | |
banker), | |
(b) money and statements showing balances on a current, | |
deposit or savings account, | 45 |
(c) leases and other dispositions of property and heritable | |
securities, | |
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(d) rights under contracts of insurance (within the meaning of | |
the Financial Services and Markets Act 2000 (Regulated | |
Activities) Order 2001), and | |
(e) options. | |
(6) The Treasury may by order amend subsections (1) to (5). | 5 |
(7) An order under subsection (6) may include any appropriate | |
consequential provision (including provision amending any | |
enactment). | |
(8) In this Chapter and Chapters 2 to 5— | |
“interest”, in relation to securities (or shares), means an interest | 10 |
in them less than full beneficial ownership and includes an | |
interest in proceeds of their sale, but does not include a right | |
to acquire them, | |
“securities option” means a right to acquire securities, and | |
“shares” includes stock. | 15 |
421 Meaning of “market value” etc | |
(1) In this Chapter and Chapters 2 to 5 “market value” has the same | |
meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 | |
of that Act. | |
(2) Where consideration for anything is given in the form of an asset (as | 20 |
opposed to a payment), any reference in this Chapter or any of | |
Chapters 2 to 5 to the amount of the consideration is to the market | |
value of the asset. | |
421A Meaning of “consideration” | |
(1) This section applies for determining for the purposes of Chapters 2 | 25 |
to 5 the amount of the consideration given for anything. | |
(2) If any consideration is given partly in respect of one thing and partly | |
in respect of another, the amount given in respect of the different | |
things is to determined on a just and reasonable apportionment. | |
(3) The consideration which is taken to be given wholly or partly for | 30 |
anything does not include the performance of any duties of, or in | |
connection with, an employment. | |
(4) No amount is to be counted more than once in calculating the | |
amount of any consideration. | |
Application of Chapters 2 to 4 | 35 |
421B Application of Chapters 2 to 4 | |
(1) Subject as follows (and to any provision contained in Chapters 2 to | |
4) those Chapters apply to securities, or an interest in securities, | |
acquired by a person where the right or opportunity to acquire the | |
securities or interest is available by reason of an employment of that | 40 |
person or any other person. | |
(2) For the purposes of subsection (1)— | |
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(a) securities are, or an interest in securities is, acquired at the | |
time when a beneficial interest is acquired (and not, if | |
different, the time when the securities are, or interest is, | |
conveyed or transferred), and | |
(b) “employment” includes a former or prospective | 5 |
employment. | |
(3) A right or opportunity to acquire securities or an interest in securities | |
made available by a person’s employer, or by a person connected | |
with a person’s employer, is to be regarded for the purposes of | |
subsection (1) as available by reason of an employment of that | 10 |
person unless— | |
(a) the person by whom the right or opportunity is made | |
available is an individual, and | |
(b) the right or opportunity is made available in the normal | |
course of the domestic, family or personal relationships of | 15 |
that person. | |
(4) Chapters 2 to 4 cease to apply to securities, or an interest in securities, | |
when subsection (5), (6) or (7) is satisfied. | |
(5) This subsection is satisfied immediately after the securities are, or the | |
interest in securities is, disposed of otherwise than to an associated | 20 |
person. | |
(6) This subsection is satisfied immediately before the death of the | |
employee. | |
(7) This subsection is satisfied 7 years after the first date after the | |
acquisition on which the employee is an employee of none of the | 25 |
following— | |
(a) the employer, | |
(b) (if the securities are, or the interest in securities is an interest | |
in, securities issued by a company) the company by which | |
they are issued, or | 30 |
(c) a person connected with a person within paragraph (a) or (b). | |
(8) In this Chapter and Chapters 2 to 4— | |
“the acquisition”, in relation to employment-related securities, | |
means the acquisition of the employment-related securities | |
pursuant to the right or opportunity available by reason of | 35 |
the employment, | |
“the employment”, in relation to employment-related | |
securities, means the employment by reason of which the | |
right or opportunity to acquire the employment-related | |
securities is available (“the employee” and “the employer” | 40 |
being construed accordingly unless otherwise indicated), | |
and | |
“employment-related securities” means securities or an interest | |
in securities to which Chapters 2 to 4 apply (ignoring any | |
provision of any of those Chapters which limits the | 45 |
application of the Chapter to a particular description or | |
descriptions of employment-related securities). | |
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