|
| |
|
(2) | In subsection (3) (loss accruing to person in year of assessment during which |
| |
he is not resident or ordinarily resident in UK not to be allowable loss unless, |
| |
under section 10, he would be chargeable to tax in respect of chargeable gain |
| |
if the loss had been a gain) after “section 10” insert “or 10B”. |
| |
Reallocation within group of gain or loss accruing under section 179 |
| 5 |
8 (1) | Section 179A of TCGA 1992 is amended as follows. |
| |
(2) | In subsection (12) (asset is “chargeable asset” if gain accruing to company on |
| |
disposal of asset would be chargeable gain and would by virtue of section |
| |
10(3) form part of company’s chargeable profits for corporation tax) for |
| |
“section 10(3)” substitute “section 10B”. |
| 10 |
Exemptions for disposals by companies with substantial shareholding |
| |
9 (1) | Schedule 7AC to TCGA 1992 is amended as follows. |
| |
(2) | In paragraph 3(2)(c)(ii) (one of conditions for exemption that chargeable |
| |
gain accruing to company on disposal would by virtue of section 10(3) form |
| |
part of company’s chargeable profits for corporation tax) for “section 10(3)” |
| 15 |
substitute “section 10B”. |
| |
| |
| |
| |
10 (1) | The amendments made by Part 1 of this Schedule have effect for |
| 20 |
determining for the purposes of TCGA 1992— |
| |
(a) | the situation of any asset, or |
| |
(b) | whether the situation of any asset is in the United Kingdom, |
| |
| at any time on or after 16th March 2005 (irrespective of when the asset was |
| |
acquired by the person holding it). |
| 25 |
(2) | The amendment made by paragraph 7 has effect in relation to any loss |
| |
accruing to a company in an accounting period ending on or after 16th |
| |
| |
(3) | The amendment made by paragraph 8 has effect for determining for the |
| |
purposes of section 179A of TCGA 1992 whether an asset is a “chargeable |
| 30 |
asset” in relation to a company at any time on or after 16th March 2005. |
| |
(4) | The amendment made by paragraph 9 has effect in relation to disposals on |
| |
or after 16th March 2005. |
| |
|
| |
|
| |
|
| |
| |
Chargeable gains: options |
| |
| |
Application of market value rule in case of exercise of option |
| |
Application of market value rule in case of exercise of option |
| 5 |
1 (1) | Section 144ZA of TCGA 1992 is amended as follows. |
| |
(2) | In subsection (1) (cases in which the section applies) at the beginning insert |
| |
“Subject to section 144ZB,”. |
| |
(3) | In subsection (4) (where market value rule is set aside by the section, amount |
| |
or value to be taken into account is, subject to section 120, to be actual |
| 10 |
amount or value) for “(subject to section 120) the actual amount or value” |
| |
substitute “(subject to section 119A) the exercise price”. |
| |
(4) | After that subsection insert— |
| |
“(4A) | In subsection (4) above “exercise price”, in relation to an option, |
| |
means the amount or value of the consideration which, under the |
| 15 |
| |
(a) | receivable (if the option binds the grantor to buy), or |
| |
(b) | payable (if the option binds the grantor to sell), |
| |
| as a result of the exercise of the option (and does not include the |
| |
amount or value of any consideration for the acquisition of the |
| 20 |
option (whether directly from the grantor or not)).”. |
| |
(5) | For subsection (5) substitute— |
| |
“(5) | Subsections (5) and (6) of section 144 shall apply for the purposes of |
| |
this section and sections 144ZB to 144ZD as they apply for the |
| |
purposes of that section.”. |
| 25 |
Application of market value rule in case of exercise of option: exception |
| |
2 | After section 144ZA of TCGA 1992 insert— |
| |
“144ZB | Exception to rule in section 144ZA |
| |
(1) | This section applies where— |
| |
(a) | section 144ZA would apply but for this section in relation to |
| 30 |
| |
(b) | the exercise of the option is non-commercial (see section |
| |
| |
(2) | But this section does not apply if— |
| |
(a) | the option is a securities option within the meaning of |
| 35 |
Chapter 5 of Part 7 of ITEPA 2003 (see section 420(8) of that |
| |
Act) to which that Chapter applies or would, apart from |
| |
section 474 of that Act, apply (see section 471 of that Act), or |
| |
(b) | section 144ZD of this Act (value of underlying subject matter |
| |
of option altered with a view to obtaining a tax advantage) |
| 40 |
applies in relation to the option. |
| |
|
| |
|
| |
|
(3) | Where this section applies, neither section 144ZA nor the following |
| |
provisions of section 144 shall apply in relation to the option— |
| |
(a) | in subsection (2), the words from “and accordingly” to the |
| |
end of that subsection, and |
| |
(b) | in subsection (3), the words from “and accordingly” to the |
| 5 |
| |
| but subsection (4) or (5) below shall instead have effect (subject to |
| |
| |
(4) | If the option binds the grantor to buy— |
| |
(a) | the cost of acquisition incurred by the grantor in buying in |
| 10 |
pursuance of his obligations under the option, and |
| |
(b) | the consideration for the disposal of what is bought by the |
| |
| |
| shall be deemed for the purposes of tax in respect of chargeable gains |
| |
to be the market value, at the time the option is exercised, of what is |
| 15 |
| |
(5) | If the option binds the grantor to sell— |
| |
(a) | the consideration for the sale, and |
| |
(b) | the cost to the person exercising the option of acquiring what |
| |
| 20 |
| shall be deemed for the purposes of tax in respect of chargeable gains |
| |
to be the market value, at the time the option is exercised, of what is |
| |
| |
(6) | But if the whole or any part of the underlying subject matter of the |
| |
option (see subsection (7)) is subject to any right or restriction which |
| 25 |
is enforceable by the person disposing of the underlying subject |
| |
matter or a person connected with him— |
| |
(a) | the market value of the underlying subject matter shall be |
| |
determined for the purposes of subsection (4) or (5) above as |
| |
if the right or restriction did not exist, and |
| 30 |
(b) | to the extent that subsection (6) or (7) of section 18 would |
| |
apply apart from this paragraph, it shall be disregarded. |
| |
(7) | In this section “underlying subject matter”, in relation to an option, |
| |
| |
(a) | if the option binds the grantor to sell, what falls to be sold on |
| 35 |
| |
(b) | if the option binds the grantor to buy, what falls to be bought |
| |
on exercise of the option. |
| |
144ZC | Section 144ZB: non-commercial exercise of option |
| |
(1) | For the purposes of section 144ZB, the exercise of an option which |
| 40 |
binds the grantor to buy is non-commercial if the exercise price for |
| |
the option (see subsection (3)) is less than the open market price (see |
| |
subsection (4)) of what is bought. |
| |
(2) | For the purposes of section 144ZB, the exercise of an option which |
| |
binds the grantor to sell is non-commercial if the exercise price for |
| 45 |
the option is greater than the open market price of what is sold. |
| |
|
| |
|
| |
|
(3) | In this section “exercise price”, in relation to an option, means the |
| |
amount or value of the consideration which, under the terms of the |
| |
| |
(a) | receivable (if the option binds the grantor to buy), or |
| |
(b) | payable (if the option binds the grantor to sell), |
| 5 |
| as a result of the exercise of the option (and does not include the |
| |
amount or value of any consideration for the acquisition of the |
| |
option (whether directly from the grantor or not)). |
| |
(4) | In this section “open market price”, in relation to the underlying |
| |
subject matter of an option (see section 144ZB(7)), means the price |
| 10 |
which the underlying subject matter might reasonably be expected to |
| |
fetch on a sale in the open market at the time the option is exercised; |
| |
and subsections (5) to (7) below apply for the purposes of this |
| |
| |
(5) | If the whole or any part of the underlying subject matter of the option |
| 15 |
is subject to any right or restriction which is enforceable by— |
| |
(a) | the person disposing of the underlying subject matter, or |
| |
(b) | a person connected with him, |
| |
| the open market price of the underlying subject matter shall be |
| |
determined as if the right or restriction did not exist. |
| 20 |
(6) | Section 272(2) (no reduction in estimated market value on account of |
| |
assumption that whole of assets are placed on market at one time) |
| |
shall apply in estimating the open market price of the underlying |
| |
subject matter of an option as it applies in estimating the market |
| |
| 25 |
(7) | Where the underlying subject matter of an option comprises or |
| |
includes assets to which section 273 applies (unquoted shares and |
| |
securities), subsection (3) of that section (assumption that relevant |
| |
information is available) shall apply in determining the open market |
| |
price of those assets as it applies for the purposes of a determination |
| 30 |
falling within subsection (1) of that section. |
| |
(8) | This section is to be construed as one with section 144ZB. |
| |
144ZD | Section 144ZB: alteration of value to obtain tax advantage |
| |
(1) | This section applies in relation to an option if each of the following |
| |
conditions is satisfied (as to the effect of this section applying, see |
| 35 |
| |
(2) | Condition 1 is that section 144ZB would, apart from subsection (2)(b) |
| |
of that section, apply in relation to the option. |
| |
(3) | Condition 2 is that, at the time the option is exercised, the open |
| |
market price (see section 144ZC(4)) of the underlying subject matter |
| 40 |
of the option (see section 144ZB(7)) differs from the open market |
| |
price of the underlying subject matter of the option at the time the |
| |
| |
(4) | Condition 3 is that some or all of that change in the open market price |
| |
of the underlying subject matter of the option results to any extent, |
| 45 |
directly or indirectly, from arrangements (see subsection (8)) (“the |
| |
| |
|
| |
|
| |
|
(a) | to which a relevant person is or has been a party, or |
| |
(b) | which include one or more transactions to which a relevant |
| |
person is or has been a party. |
| |
(5) | In subsection (4) above “relevant person” means any of the |
| |
| 5 |
(a) | the grantor of the option; |
| |
(b) | any person who at any time holds the option; |
| |
(c) | a person connected with one or more of the persons |
| |
mentioned in paragraph (a) or (b) above. |
| |
(6) | Condition 4 is that, if there were to be disregarded so much of that |
| 10 |
change in the open market price of the underlying subject matter of |
| |
the option as results to any extent, directly or indirectly, from the |
| |
relevant arrangements, the exercise of the option would not be non- |
| |
commercial (see section 144ZC). |
| |
(7) | Condition 5 is that (apart from this section) as a result, directly or |
| 15 |
indirectly, of the relevant arrangements— |
| |
(a) | the grantor of the option, or |
| |
(b) | the person exercising the option, |
| |
| would obtain or might be expected to obtain an advantage (see |
| |
subsection (9)) in relation to capital gains tax or corporation tax in |
| 20 |
respect of chargeable gains directly or indirectly in consequence of, |
| |
or otherwise in connection with, the exercise of the option. |
| |
(8) | In this section “arrangements” includes any agreement, |
| |
understanding, scheme, transaction or series of transactions |
| |
(whether or not legally enforceable). |
| 25 |
(9) | In this section “advantage”, in relation to capital gains tax or |
| |
corporation tax in respect of chargeable gains, means— |
| |
(a) | relief or increased relief from, or repayment or increased |
| |
repayment of, that tax, or the avoidance or reduction of a |
| |
charge to that tax or an assessment to that tax or the |
| 30 |
avoidance of a possible assessment to that tax, or |
| |
(b) | the deferral of any payment of that tax or the advancement of |
| |
any repayment of that tax. |
| |
(10) | This section is to be construed as one with sections 144ZB and |
| |
| 35 |
| |
Miscellaneous amendments relating to share options etc |
| |
Shares acquired on same day: election for alternative treatment |
| |
3 (1) | Section 105A of TCGA 1992 is amended as follows. |
| |
(2) | In subsection (1) (cases in which subsection (2) applies) in paragraph (b) |
| 40 |
(some of the acquired shares to be approved-scheme shares) for sub- |
| |
paragraphs (i) and (ii) substitute— |
| |
“(i) | the exercise of a qualifying option within the meaning |
| |
given by section 527(4) of ITEPA 2003 (enterprise |
| |
management incentives) in circumstances where |
| 45 |
|
| |
|
| |
|
section 530 or 531 of that Act (exercise of option to |
| |
acquire shares) applies, or |
| |
(ii) | the exercise of an option to which Chapter 7 or 8 of |
| |
Part 7 of that Act (approved share option schemes) |
| |
applies in circumstances where section 519(1) or |
| 5 |
524(1) of that Act applies.”. |
| |
Employment-related securities options |
| |
4 (1) | Section 149A of TCGA 1992 is amended as follows. |
| |
(2) | In subsection (1) (cases in which the section applies) for paragraph (b) |
| |
(option to consist of right to acquire shares in body corporate and to be |
| 10 |
obtained by individual by reason of his office or employment) substitute— |
| |
“(b) | the option is a securities option within the meaning of |
| |
Chapter 5 of Part 7 of ITEPA 2003 (see section 420(8) of that |
| |
Act) to which that Chapter applies or would, apart from |
| |
section 474 of that Act, apply (see section 471 of that Act), |
| 15 |
| |
(3) | In that subsection, in paragraph (c) (section 17(1) to apply for calculating |
| |
consideration for grant of option) after “section 17(1)” insert “of this Act”. |
| |
(4) | The heading of the section accordingly becomes “Employment-related |
| |
| 20 |
Interpretation of TCGA 1992 |
| |
5 (1) | Section 288 of TCGA 1992 is amended as follows. |
| |
(2) | In subsection (1A) (employment-related securities options) for the second |
| |
| |
| “In this subsection “employment-related securities option” means a |
| 25 |
securities option within the meaning of Chapter 5 of Part 7 of ITEPA |
| |
2003 (see section 420(8) of that Act) to which that Chapter applies or |
| |
would, apart from section 474 of that Act, apply (see section 471 of |
| |
that Act); and other expressions used in this subsection and that |
| |
Chapter have the same meaning in this subsection as in that |
| 30 |
| |
| |
| |
| |
6 (1) | The amendments made by paragraphs 1 to 3 have effect in relation to cases |
| 35 |
where the option in question is exercised on or after 2nd December 2004 |
| |
(whenever the option was acquired). |
| |
(2) | The amendments made by paragraphs 4 and 5 have effect in relation to |
| |
options granted on or after 2nd December 2004. |
| |
|
| |
|