House of Commons portcullis
House of Commons
Session 2004 - 05
Internet Publications
Other Bills before Parliament

Finance Bill


Finance Bill
Schedule 2 — Employee securities: anti-avoidance

143

 

giving any consideration for the conversion or incurring any

expenses in connection with it.”

      (4)  

This paragraph has effect in relation to acquisitions on or after 2nd

December 2004.

10    (1)  

In section 440 (amount of charge under section 438), after subsection (3)

5

insert—

“(3A)   

If (because of subsection (2) of section 437) subsection (1) of that

section did not apply in relation to the employment-related

securities, the taxable amount is to be reduced by the amount by

which—

10

(a)   

the market value of the employment-related securities for the

purposes specified in that subsection, exceeded

(b)   

what it would have been had that subsection applied,

   

(less the aggregate of any amount by which the taxable amount on

any previous chargeable event relating to the employment-related

15

securities has been reduced under this subsection).”

      (2)  

This paragraph has effect on and after 2nd December 2004.

11    (1)  

In section 443 (exception from charge under section 438 for certain company

shares), for subsection (1A) substitute—

“(1A)   

This subsection is satisfied unless something which affects the

20

employment-related securities has been done (at or before the time

when section 438 would apply) as part of a scheme or arrangement

the main purpose (or one of the main purposes) of which is the

avoidance of tax or national insurance contributions.”

      (2)  

This paragraph has effect where something such as is mentioned in section

25

443(1A) of ITEPA 2003 has been done on or after 2nd December 2004.

Securities acquired for less than market value

12         

Chapter 3C of Part 7 (securities acquired for less than market value) is

amended as follows.

13    (1)  

In section 446R (exception from Chapter for certain company shares), for

30

subsection (1A) substitute—

“(1A)   

This subsection is satisfied unless something which affects the

employment-related securities has been done (at or before the time

of the acquisition) as part of a scheme or arrangement the main

purpose (or one of the main purposes) of which is the avoidance of

35

tax or national insurance contributions.”

      (2)  

This paragraph has effect where something such as is mentioned in section

446R(1A) of ITEPA 2003 has been done on or after 2nd December 2004.

14    (1)  

In section 446U(1) (discharge of notional loan), insert at the end “or

(c)   

something which affects the employment-related securities is

40

done as part of a scheme or arrangement the main purpose

(or one of the main purposes) of which is the avoidance of tax

or national insurance contributions.”

 

 

Finance Bill
Schedule 2 — Employee securities: anti-avoidance

144

 

      (2)  

This paragraph has effect where something such as is mentioned in section

443U(1)(c) of ITEPA 2003 has been done on or after 2nd December 2004.

15    (1)  

After section 446U insert—

“446UA  

 Pre-acquisition avoidance cases

(1)   

Sections 446S to 446U do not apply if the main purpose (or one of the

5

main purposes) of the arrangements under which the right or

opportunity to acquire the employment-related securities is made

available is the avoidance of tax or national insurance contributions.

(2)   

But instead an amount equal to what would (apart from this section)

be the amount of the notional loan initially outstanding by virtue of

10

sections 446S and 446T counts as employment income of the

employee for the tax year in which the acquisition takes place.”

      (2)  

This paragraph has effect in relation to acquisitions on or after 2nd

December 2004.

16    (1)  

Section 698 (PAYE: special charges on employment-related securities) is

15

amended as follows.

      (2)  

In subsection (1), after paragraph (e) insert—

“(ea)   

section 446UA (securities or interest acquired for less than

market value: charge in avoidance cases),”.

      (3)  

In subsection (6), after paragraph (d) insert—

20

“(da)   

in relation to an amount counting as employment income

under section 446UA, the date of the acquisition of the

securities or interest in securities in question,”.

      (4)  

This paragraph has effect on and after the day on which this Act is passed.

Post-acquisition benefits from securities

25

17         

Chapter 4 of Part 7 (post-acquisition benefits from securities) is amended as

follows.

18    (1)  

Section 447 (charge on other chargeable benefits from securities) is amended

as follows.

      (2)  

In subsection (1), for “by virtue of the ownership of employment-related

30

securities by that person or another associated person” substitute “in

connection with employment-related securities”.

      (3)  

For subsection (4) substitute—

“(4)   

If the benefit is otherwise chargeable to income tax this section does

not apply unless something has been done which affects the

35

employment-related securities as part of a scheme or arrangement

the main purpose (or one of the main purposes) of which is the

avoidance of tax or national insurance contributions.”

      (4)  

Sub-paragraph (2) has effect on and after 2nd December 2004 and sub-

paragraph (3) has effect where something such as is mentioned in section

40

447(4) of ITEPA 2003 has been done on or after that date.

19    (1)  

In section 449 (exception from charge under section 447 for certain company

 

 

Finance Bill
Schedule 3 — Non-UK resident vulnerable persons: interpretation

145

 

shares), for subsection (1A) substitute—

“(1A)   

This subsection is satisfied unless something which affects the

employment-related securities has been done as part of a scheme or

arrangement the main purpose (or one of the main purposes) of

which is the avoidance of tax or national insurance contributions.”

5

      (2)  

This paragraph has effect where something such as is mentioned in section

449(1A) of ITEPA 2003 has been done on or after 2nd December 2004.

Schedule 3

Sections 44 and 49

 

Non-UK resident vulnerable persons: interpretation

Vulnerable person’s actual income

10

1          

The “vulnerable person’s actual income” for the tax year means the income

that would arise (or be treated as arising) under the Income Tax Acts to the

vulnerable person in the tax year on the assumption that the vulnerable

person is resident and domiciled in the United Kingdom throughout the tax

year.

15

Trustees’ specially taxed income

2          

The “trustees’ specially taxed income” for the tax year means income arising

(or treated as arising) to the trustees in the tax year from property held on

qualifying trusts for the benefit of the vulnerable person in connection with

which special income tax treatment applies for the tax year in accordance

20

with section 41 by virtue of a claim for special tax treatment under this

Chapter.

Vulnerable person’s deemed CGT taxable amount

3     (1)  

The “vulnerable person’s deemed CGT taxable amount” for the tax year

means the sum of—

25

(a)   

the vulnerable person’s taxable amount for the tax year for the

purposes of section 3 of TCGA 1992 calculated by reference only to

actual gains and actual losses, and

(b)   

the vulnerable person’s taxable amount for the tax year for the

purposes of that section calculated by reference only to assumed

30

gains and assumed losses.

      (2)  

But in calculating the taxable amount under sub-paragraph (1)(b)—

(a)   

no deduction is to be made under section 2(2)(b) of TCGA 1992, and

(b)   

the words “except as provided by section 62” in section 2(3) of that

Act are to be disregarded.

35

      (3)  

In determining the vulnerable person’s deemed CGT taxable amount for the

tax year any claims or elections made in relation to any assumed gains of the

vulnerable person are to be disregarded.

      (4)  

In this paragraph—

(a)   

“actual gains” and “actual losses” have the meanings given in

40

paragraph 5, and

 

 

Finance Bill
Schedule 3 — Non-UK resident vulnerable persons: interpretation

146

 

(b)   

“assumed gains” and “assumed losses” have the meanings given in

paragraph 6.

Vulnerable person’s notional section 77 gains

4     (1)  

The “vulnerable person’s notional section 77 gains” for the tax year means

the chargeable gains that would be treated as accruing to the vulnerable

5

person in the tax year under section 77 of TCGA 1992 by virtue of section 47

of this Act if the relevant assumptions were made.

      (2)  

In this paragraph “relevant assumptions” has the meaning given in

paragraph 7.

Actual gains and actual losses

10

5     (1)  

“Actual gains” means any chargeable gains which accrue to the vulnerable

person and in respect of which he is chargeable to capital gains tax for the

tax year.

      (2)  

“Actual losses” means—

(a)   

any allowable losses accruing to the vulnerable person in the tax

15

year, and

(b)   

so far as they have not been allowed as a deduction from chargeable

gains accruing to him in any previous tax year, any allowable losses

accruing to him in any previous tax year (not earlier than that

beginning on 6th April 1965).

20

Assumed gains and assumed losses

6     (1)  

“Assumed gains” means any chargeable gains, other than actual gains,

which, on the relevant assumptions, would accrue to the vulnerable person

and in respect of which, on those assumptions, he would be chargeable to

capital gains tax for the tax year.

25

      (2)  

“Assumed losses” means any allowable losses, other than actual losses,

which, on the relevant assumptions, would accrue to the vulnerable person

in the tax year.

      (3)  

In this paragraph “relevant assumptions” has the meaning given in

paragraph 7.

30

Relevant assumptions

7     (1)  

For the purposes of paragraphs 4 and 6 the “relevant assumptions” are—

(a)   

that the vulnerable person is resident and domiciled in the United

Kingdom throughout the tax year, and

(b)   

that he has given a notice under subsection (2A) of section 16 of

35

TCGA 1992 (computation of losses) in respect of each loss accruing

to him in the tax year which by virtue of subsection (3) of that section

would not be an allowable loss (but for the assumption in paragraph

(a)).

      (2)  

But the relevant assumption in sub-paragraph (1)(a) does not apply for the

40

purposes of section 10A of TCGA 1992 (temporary non-residents).

 

 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2005
Revised 24 March 2005