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triggering event by a different company (“the successor company”) | |
or by different companies (“the successor companies”) from the one | |
by which it was carried on at the time of the award or grant. | |
(2) For the purposes of sub-paragraph (1)— | |
(a) the “relief-triggering event” for shares is the event that, in accordance | 5 |
with paragraph 10, 17 or 22, determines the accounting period for | |
which relief under this Schedule is given in respect of them; | |
(b) there is a “qualifying transfer” of a business (or a part of one) where | |
the business (or part) is transferred from one company to another | |
company that is, or to two or more companies that are, members of | 10 |
the same group. | |
(3) Where this paragraph applies— | |
(a) relief under this Schedule in respect of the shares is given to the | |
successor company or, as the case may be, to whichever one of the | |
successor companies is jointly nominated by them, and | 15 |
(b) the reference in paragraph 1(1)(a) or (b) to “that company” shall be | |
read as a reference to the company by which the relevant business | |
was carried on at the time of the award or grant. | |
Relationship between relief and other deductions: priority of deductions under SIP code | |
24 (1) Deductions available under any of the following provisions of Schedule | 20 |
4AA to the Taxes Act 1988 (share incentive plans) are to be given in priority | |
to relief under this Schedule— | |
(a) paragraph 2 (deduction for providing free or matching shares); | |
(b) paragraph 3 (deduction for expenses in providing partnership | |
shares); | 25 |
(c) paragraph 9 or 10(3) (deduction for contribution to plan trust). | |
(2) No relief is available under this Schedule in respect of shares in relation to | |
which a deduction is allowable, or has been made, under any of those | |
provisions. | |
Relationship between relief and other deductions: exclusion of other deductions | 30 |
25 (1) Where relief under this Schedule is available for any accounting period, no | |
other deduction is allowed for any corporation tax purposes (whether for | |
that or any other period) in respect of the cost of providing the shares. | |
This applies to any deduction, whether by the employing company or any | |
other company, in computing chargeable profits for the purposes of | 35 |
corporation tax. | |
(2) For this purpose the cost of providing the shares— | |
(a) means expenses directly related to the provision of the shares, and | |
(b) includes, in a case where the shares are acquired under an employee | |
share scheme, any amount paid or payable by the employing | 40 |
company in respect of the participation of the employee in that | |
scheme. | |
(3) The following are not regarded as part of the cost of providing the shares— | |
(a) expenses incurred in establishing the employee share scheme under | |
which the recipient acquires the shares; | 45 |
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(b) expenses incurred in meeting, or contributing to, the costs of | |
administering the scheme; | |
(c) the costs of borrowing for the purposes of the scheme; | |
(d) fees, commission, stamp duty and similar incidental expenses of | |
acquiring the shares. | 5 |
(4) In this paragraph “employee share scheme” means any scheme or | |
arrangement for enabling shares to be acquired by reason of employees’ | |
employment. | |
Meaning of “employment” | |
26 For the purposes of this Schedule— | 10 |
(a) references to employment by a company include holding an office | |
with that company, and related expressions have a corresponding | |
meaning, and | |
(b) members of a company whose affairs are managed by the members | |
themselves are treated as holding an office with the company. | 15 |
Exercise of option after death of employee or recipient | |
27 (1) Where an option to acquire shares obtained by reason of the employee’s | |
employment is exercised by the recipient after the employee’s death, the | |
condition in paragraph 14 (income tax position of the employee) is treated as | |
met if it would be met were the employee still alive. | 20 |
(2) Where an option to acquire shares obtained by reason of the employee’s | |
employment is exercised after the death of the recipient, paragraph 1(1)(b) | |
and Part 3 of this Schedule, and sub-paragraph (1) above, apply as if the | |
recipient were still alive and the option were exercised by him. | |
Meaning of “group company” and “parent company” | 25 |
28 For the purposes of this Schedule— | |
(a) a company is a “group company”, in relation to another company, if | |
they are members of the same group, | |
(b) two companies are members of the same group if, and only if, one is | |
a 51% subsidiary of the other or both are 51% subsidiaries of a third | 30 |
company, and | |
(c) a company is a “parent company” in relation to another company if | |
that other is its 51% subsidiary. | |
Meaning of “consortium” and “commercial association of companies” | |
29 (1) For the purposes of this Schedule a company is a member of a consortium | 35 |
owning another company if it is one of five or fewer companies— | |
(a) that between them beneficially own not less than 75% of the other | |
company’s ordinary share capital, and | |
(b) each of which beneficially owns not less than 10% of that capital. | |
For this purpose the shareholdings of members of a group of companies | 40 |
shall be treated as held by a single company. | |
(2) In this Schedule a “commercial association of companies” means a company | |
together with such of its associated companies as carry on businesses that | |
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are of such a nature that the businesses of the company and the associated | |
companies, taken together, may be reasonably considered to make up a | |
single composite undertaking. | |
“Associated company” here has the meaning given by section 416 of the | |
Taxes Act 1988. | 5 |
Minor definitions | |
30 In this Schedule— | |
“the Contributions and Benefits Act” means— | |
(a) the Social Security Contributions and Benefits Act 1992 (c. 4), | |
or | 10 |
(b) the Social Security Contributions and Benefits (Northern | |
Ireland) Act 1992 (c. 7); | |
“control” has the meaning given by section 840 of the Taxes Act 1988; | |
“insurance company” and “life assurance business” have the meanings | |
given by section 431(2) of that Act; | 15 |
“investment company” has the meaning given by section 130 of that | |
Act; | |
“market value” has the same meaning as in the Taxation of Chargeable | |
Gains Act 1992 (c. 12) (see sections 272 and 273 of that Act); | |
“option” includes any right to acquire shares; | 20 |
“ordinary shares”, in relation to a company, means shares forming part | |
of the company’s ordinary share capital; | |
“shares” includes— | |
(a) an interest in shares, and | |
(b) stock or an interest in stock. | 25 |
Index of defined expressions | |
31 In this Schedule the following expressions are defined or otherwise | |
explained by the provisions indicated: | |
| commercial association of companies | paragraph 29(2) | | | | consortium | paragraph 29(1) | | 30 | | Contributions and Benefits Act | paragraph 30 | | | | control | paragraph 30 | | | | employment and related expressions | paragraph 26 | | | | the employee | paragraph 1(3) | | | | employing company | paragraph 1(3) | | 35 | | group | paragraph 28(b) | | | | group company | paragraph 28(a) | | | | insurance company | paragraph 30 | | | | investment company | paragraph 30 | | |
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| life assurance business | paragraph 30 | | | | market value | paragraph 30 | | | | option | paragraph 30 | | | | ordinary shares | paragraph 30 | | | | parent company | paragraph 28(c) | | 5 | | the recipient | paragraph 1(3) | | | | shares | paragraph 30 | | | | subject to forfeiture | paragraph 19 | | | | within the charge to corporation tax (of a | paragraph 3(2) | | | | business) | | | 10 |
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Part 6 | |
Commencement and transitional provisions | |
Commencement | |
32 This Schedule applies to accounting periods of the employing company | |
beginning on or after 1st January 2003. | 15 |
Transitional provisions | |
33 (1) Relief is not available under this Schedule in respect of shares to the extent | |
that a deduction is available or has been made in respect of relevant | |
expenses in computing the chargeable profits of the employing company or | |
any other company for the purposes of corporation tax for an accounting | 20 |
period beginning before 1st January 2003. | |
(2) In sub-paragraph (1) “relevant expenses” means any expenses referable, | |
directly or indirectly, to the provision of the shares in question. | |
(3) In relation to any time before the coming into force of the Income Tax | |
(Earnings and Pensions) Act 2003 (c. 1) (“ITEPA”), this Schedule has effect as | 25 |
if— | |
(a) the references to a charge to income tax under ITEPA were to a | |
charge to income tax under section 19 of the Taxes Act 1988; | |
(b) the reference in paragraph 14(1)(a)(ii) to section 476 or 477 of ITEPA | |
were to section 135 of the Taxes Act 1988; | 30 |
(c) the reference in paragraph 14(2)(a) to section 519, 520, 524 or 525 of | |
ITEPA were to section 185(3)(a) of the Taxes Act 1988; | |
(d) the reference in paragraph 14(2)(b) to section 530 of ITEPA were to | |
paragraph 44 of Schedule 14 to the Finance Act 2000 (c. 17); | |
(e) the reference in paragraph 20(2)(a) to section 427 of ITEPA were to | 35 |
section 140A of the Taxes Act 1988; | |
(f) the references in paragraph 24(1) to paragraphs 2, 3, 9 and 10(3) of | |
Schedule 4AA to the Taxes Act 1988 were to paragraphs 106, 107, | |
112A and 112B(3) respectively of Schedule 8 to the Finance Act 2000. | |
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