|
| |
| |
(b) the payment made for employment-related securities at or | |
before that time is less than their market value. | |
(2) For the purposes of subsection (1) any obligation to make a payment | |
or further payment after the time of the acquisition is to be | |
disregarded. | 5 |
(3) Where the employment-related securities are, or are an interest in, | |
securities which are not fully paid up, the reference in subsection (1) | |
to the market value of the employment-related securities is to what | |
it would be if the securities were fully paid up. | |
(4) If section 425(2) (no charge on acquisition of certain restricted | 10 |
securities or restricted interests in securities) applies in relation to the | |
employment-related securities, this Chapter has effect as if the | |
employment-related securities were not acquired until the | |
occurrence of the first event which is a chargeable event for the | |
purposes of section 426 in relation to the employment-related | 15 |
securities. | |
(5) This section is subject to section 446R (case outside this Chapter). | |
446R Case outside this Chapter | |
(1) This Chapter does not apply if— | |
(a) the employment-related securities are shares (or an interest | 20 |
in shares) in a company of a class, | |
(b) all the company’s shares of the class are acquired either for | |
no payment or for a payment less than their market value, | |
and | |
(c) subsection (3) or (4) is satisfied. | 25 |
(2) Where the company’s shares of the class are not fully paid up, the | |
reference in subsection (1) to their market value is to what it would | |
be if they were fully paid up. | |
(3) This subsection is satisfied if, at the time of the acquisition of the | |
employment-related securities, the company is employee-controlled | 30 |
by virtue of holdings of shares of the class. | |
(4) This subsection is satisfied if, at that time, the majority of the | |
company’s shares of the class are not held by or for the benefit of any | |
of the following— | |
(a) employees of the company, | 35 |
(b) persons who are related to an employee of the company, | |
(c) associated companies of the company, | |
(d) employees of any associated company of the company, or | |
(e) persons who are related to an employee of any such | |
associated company. | 40 |
(5) For the purposes of subsection (4) a person is related to an employee | |
if— | |
(a) the person acquired the shares pursuant to a right or | |
opportunity available by reason of the employee’s | |
employment, or | 45 |
| |
| |
|
| |
| |
(b) the person is connected with a person who so acquired the | |
shares or with the employee and acquired the shares | |
otherwise than by or under a disposal made by way of a | |
bargain at arm’s length from the employee or another person | |
who is related to the employee. | 5 |
446S Notional loan | |
(1) Where this Chapter applies an interest-free loan (“the notional loan”) | |
is to be treated as having been made to the employee by the | |
employer at the time of the acquisition. | |
(2) The provisions listed in subsection (3) apply as though the notional | 10 |
loan were an employment-related loan as defined in section 174 if | |
and for so long as the employment has not terminated. | |
(3) The provisions are— | |
section 175 (benefit of taxable cheap loan treated as earnings), | |
section 178 (exception for loans where interest qualifies for tax | 15 |
relief), | |
section 180 (threshold for benefit of loan to be treated as | |
earnings), | |
section 182 (normal method of calculation: averaging), | |
section 183 (alternative method of calculation), | 20 |
section 184 (interest treated as paid), | |
section 185 (apportionment of cash equivalent in case of joint | |
loan etc), and | |
section 187 (aggregation of loans by close company to director). | |
446T Amount of notional loan | 25 |
(1) The amount of the notional loan initially outstanding is—
MV − DA
| |
where— | |
MV is the market value of the employment-related securities at | |
the time of the acquisition, and | |
DA is the total of any deductible amounts. | 30 |
(2) Where the employment-related securities are, or are an interest in, | |
securities which are not fully paid up, the reference in subsection (1) | |
to the market value of the employment-related securities is to what | |
it would be if the securities were fully paid up. | |
(3) For the purposes of subsection (1) each of the following is a | 35 |
“deductible amount”— | |
(a) any payment made for the employment-related securities by | |
the employee, and any payment so made by the person by | |
whom they were acquired (if not the employee), at or before | |
the time of the acquisition, | 40 |
(b) any amount that constitutes earnings from the employee’s | |
employment under Chapter 1 of Part 3 (earnings) in respect | |
of the acquisition of the employment-related securities, | |
(c) if section 425(2) (no charge on acquisition of certain restricted | |
securities or restricted interests in securities) applies in | 45 |
| |
| |
|
| |
| |
relation to the employment-related securities, any amount | |
that counts as employment income of the employee under | |
section 426 by reason of the first event which is a chargeable | |
event for the purposes of that section in relation to the | |
employment-related securities, | 5 |
(d) if the employment-related securities were acquired on a | |
conversion of other employment-related securities, any | |
amount that counts as employment income of the employee | |
under section 438 (charge on conversion) by reason of the | |
conversion, and | 10 |
(e) if the acquisition is pursuant to a securities option, any | |
amount that counted as employment income of the employee | |
under section 476 (acquisition of securities pursuant to | |
securities option) in respect of the acquisition. | |
(4) The amount of the notional loan outstanding at any subsequent time | 15 |
is the difference between— | |
(a) the amount initially outstanding, and | |
(b) the amount of any payments or further payments made for | |
the employment-related securities after the acquisition but | |
before that time. | 20 |
446U Discharge of notional loan | |
(1) The notional loan is treated as discharged when— | |
(a) the employment-related securities are disposed of otherwise | |
than to an associated person, or | |
(b) if the employment-related securities were securities, or an | 25 |
interest in securities, not fully paid up at the time of the | |
acquisition, the outstanding or contingent liability to pay for | |
them is released, transferred or adjusted so as no longer to | |
bind any associated person. | |
(2) If the notional loan is discharged as the result of an event specified in | 30 |
subsection (1), the amount of the notional loan outstanding | |
immediately before the occurrence of the event counts as | |
employment income of the employee for the relevant tax year | |
(whether or not the employment has terminated before or since the | |
acquisition). | 35 |
(3) The “relevant tax year” is the tax year in which the notional loan is | |
treated as discharged. | |
(4) The notional loan is also treated as discharged when— | |
(a) payments or further payments for the employment-related | |
securities equal to the amount initially outstanding in | 40 |
relation to them have been made by an associated person, or | |
(b) the employee dies. | |
446V Chapter to be additional to other income tax charges | |
This Chapter does not affect any liability to income tax arising in | |
respect of the acquisition under— | 45 |
(a) Chapter 1 of Part 3 (earnings), | |
| |
| |
|
| |
| |
(b) Chapter 10 of Part 3 (taxable benefits: residual | |
liability to charge), | |
(c) Chapter 3 of this Part (acquisition by conversion), | |
(d) Chapter 3A of this Part (securities with artificially | |
depressed market value), or | 5 |
(e) Chapter 5 of this Part (acquisition of securities | |
pursuant to securities option). | |
446W Definitions | |
(1) In this Chapter— | |
“interest”, in relation to securities, | 10 |
“securities”, | |
“securities option”, and | |
“shares”, | |
have the meaning indicated in section 420. | |
(2) In this Chapter “market value” has the meaning indicated in section | 15 |
421(1). | |
(3) In this Chapter “the acquisition” has the meaning indicated in section | |
421B(8) (but subject to section 446Q(4)). | |
(4) In this Chapter— | |
“the employment”, | 20 |
“the employee” (except in section 446R), | |
“the employer”, and | |
“employment-related securities”, | |
have the meaning indicated in section 421B(8). | |
(5) In this Chapter “associated person” has the meaning indicated in | 25 |
section 421C. | |
(6) In this Chapter— | |
“associated company”, and | |
“employee-controlled”, | |
have the meaning indicated in section 421H. | 30 |
(7) In this Chapter “the notional loan” has the meaning indicated in | |
section 446S(1).”. | |
(2) Sub-paragraph (1) has effect in relation to securities, and interests in | |
securities, acquired on or after 16th April 2003. | |
8 (1) After Chapter 3C of Part 7 (inserted by paragraph 7(1)) insert— | 35 |
“Chapter 3D | |
Securities disposed of for more than market value | |
446X Application of this Chapter | |
This Chapter applies if— | |
| |
| |
|
| |
| |
(a) employment-related securities are disposed of by an | |
associated person so that no associated person is any | |
longer entitled to a beneficial interest in them, and | |
(b) the disposal is for a consideration which exceeds the | |
market value of the employment-related securities at | 5 |
the time of the disposal. | |
446Y Amount treated as income | |
(1) Where this Chapter applies the amount determined under | |
subsection (3) counts as employment income of the employee for the | |
relevant tax year. | 10 |
(2) The “relevant tax year” is the tax year in which the disposal occurs. | |
(3) The amount is—
CD − MV − DA
| |
where— | |
CD is the amount of the consideration given on the disposal, | |
MV is the market value of the employment-related securities at | 15 |
the time of the disposal, and | |
DA is the amount of any expenses incurred in connection with | |
the disposal. | |
446Z Definitions | |
(1) In this Chapter “market value” has the meaning indicated in section | 20 |
421(1). | |
(2) For the purposes of this Chapter sections 421(2) and 421A apply for | |
determining the amount of the consideration given for anything. | |
(3) In this Chapter— | |
“the employee”, and | 25 |
“employment-related securities”, | |
have the meaning indicated in section 421B(8). | |
(4) In this Chapter “associated person” has the meaning indicated in | |
section 421C.”. | |
(2) Sub-paragraph (1) has effect in relation to securities, and interests in | 30 |
securities, disposed of on or after 16th April 2003. | |
9 (1) For Chapter 4 of Part 7 substitute— | |
“Chapter 4 | |
Post-acquisition benefits from securities | |
447 Charge on other chargeable benefits from securities | 35 |
(1) This Chapter applies if an associated person receives a benefit by | |
virtue of the ownership of employment-related securities by that | |
person or another associated person. | |
(2) The taxable amount determined under section 448 counts as | |
employment income of the employee for the relevant tax year. | 40 |
| |
| |
|
| |
| |
(3) The “relevant tax year” is the tax year in which the benefit is received. | |
(4) This section does not apply if the benefit is otherwise chargeable to | |
income tax. | |
(5) This section is subject to section 449 (case outside this Chapter). | |
448 Amount of charge | 5 |
The taxable amount for the purposes of section 447 (charge on other | |
chargeable benefits) is the amount or market value of the benefit. | |
449 Case outside this Chapter | |
(1) This Chapter does not apply if— | |
(a) the employment-related securities are shares (or an interest | 10 |
in shares) in a company of a class, | |
(b) a similar benefit is received by the owners of all the | |
company’s shares of the class, and | |
(c) subsection (2) or (3) is satisfied. | |
(2) This subsection is satisfied if, immediately before the receipt of the | 15 |
benefit, the company is employee-controlled by virtue of holdings of | |
shares of the class. | |
(3) This subsection is satisfied if, immediately before the receipt of the | |
benefit, the majority of the company’s shares of the class are not held | |
by or for the benefit of any of the following— | 20 |
(a) employees of the company, | |
(b) persons who are related to an employee of the company, | |
(c) associated companies of the company, | |
(d) employees of any associated company of the company, or | |
(e) persons who are related to an employee of any such | 25 |
associated company. | |
(4) For the purposes of subsection (3) a person is related to an employee | |
if— | |
(a) the person acquired the shares pursuant to a right or | |
opportunity available by reason of the employee’s | 30 |
employment, or | |
(b) the person is connected with a person who so acquired the | |
shares or with the employee and acquired the shares | |
otherwise than by or under a disposal made by way of a | |
bargain at arm’s length from the employee or another person | 35 |
who is related to the employee. | |
450 Definitions | |
(1) In this Chapter— | |
“interest”, in relation to shares, and | |
“shares”, | 40 |
have the meaning indicated in section 420(8). | |
(2) In this Chapter “market value” has the meaning indicated in section | |
421(1). | |
| |
| |
|
| |
| |
(3) In this Chapter— | |
“the employee” (except in section 449), and | |
“employment-related securities”, | |
have the meaning indicated in section 421B(8). | |
(4) In this Chapter “associated person” has the meaning indicated in | 5 |
section 421C. | |
(5) In this Chapter— | |
“associated company”, and | |
“employee-controlled”, | |
have the meaning indicated in section 421H.”. | 10 |
(2) Subject to sub-paragraph (3), sub-paragraph (1) has effect on and after 16th | |
April 2003 (so that it applies on and after that date in relation to | |
employment-related securities irrespective of the date of the acquisition). | |
(3) The provisions of Chapter 4 as originally enacted which are mentioned in | |
sub-paragraph (4)— | 15 |
(a) continue to apply in relation to shares, and interests in shares, | |
acquired before 16th April 2003, and | |
(b) apply in relation to shares, and interests in shares, acquired on or | |
after that date until such day the day appointed under paragraph | |
3(2). | 20 |
In this sub-paragraph “shares” means shares in a company or securities as | |
defined in section 254(1) of the Taxes Act 1988 issued by a company. | |
(4) The provisions are— | |
section 450(1), (2), (3)(a), (4), (5) and (6)(a), and | |
sections 447 to 449, section 451, section 452(1) to (3), section 461(1) and | 25 |
(2), section 462, sections 464 to 466 and sections 468 to 470, so far as | |
relevant for the purposes of those provisions of section 450 (or the | |
other provisions mentioned in this subsection so far as so relevant). | |
10 (1) For Chapter 5 of Part 7 substitute— | |
“Chapter 5 | 30 |
Securities options | |
Introduction | |
471 Options to which this Chapter applies | |
(1) This Chapter applies to a securities option acquired by a person | |
where the right or opportunity to acquire the securities option is | 35 |
available by reason of an employment of that person or any other | |
person. | |
(2) For the purposes of subsection (1) “employment” includes a former | |
or prospective employment. | |
(3) A right or opportunity to acquire a securities option made available | 40 |
by a person’s employer, or 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 person unless— | |
| |
| |
|
