|
| |
|
(5) | This section has effect in relation to the year 2005-06 and subsequent years of |
| |
| |
| |
19 | Armed forces pensions and compensation schemes |
| |
(1) | ITEPA 2003 is amended as follows. |
| 5 |
(2) | In subsection (1) of section 393 as originally enacted (application of Chapter 2 |
| |
of Part 6) after “non-approved retirement benefits scheme” insert “other than a |
| |
scheme established by an order under section 1(2) of the Armed Forces |
| |
(Pensions and Compensation) Act 2004 (armed and reserve forces |
| |
| 10 |
(3) | In paragraph (a) of section 639 (exemption from income tax for pensions due to |
| |
| |
(a) | for “the Department of Work and Pensions” substitute “the Ministry of |
| |
| |
(b) | for “any Order in Council, Royal Warrant, order or scheme” substitute |
| 15 |
“instrument specified in subsection (2),”. |
| |
(4) | At the end of section 639 (which becomes subsection (1)) insert— |
| |
“(2) | The instruments referred to in subsection (1)(a) are— |
| |
Defence (Local Defence Volunteers) Regulations 1940 |
| |
| 20 |
War Pensions (Coastguards) Scheme 1944 (S.R. & O. 1944/500), |
| |
War Pensions (Naval Auxiliary Personnel) Scheme 1964 |
| |
| |
Pensions (Polish Forces) Scheme 1964 (S.I. 1964/2007), |
| |
War Pensions (Mercantile Marine) Scheme 1964 (S.I. 1964/2058), |
| 25 |
Order by Her Majesty concerning pensions and other grants in |
| |
respect of disablement or death due to service in the Home |
| |
| |
Order by Her Majesty concerning pensions and other grants in |
| |
respect of disablement or death due to service in the Home |
| 30 |
Guard after 27th April 1952 (1964 Cmnd. 2564), |
| |
Order by Her Majesty concerning pensions and other grants in |
| |
respect of disablement or death due to service in the Ulster |
| |
Defence Regiment (1971 Cmnd. 4567), |
| |
Personal Injuries (Civilians) Scheme 1983 (S.I. 1983/686), |
| 35 |
Naval, Military and Air Forces etc. (Disablement and Death) |
| |
Service Pensions Order 1983 (S.I. 1983/883). |
| |
(3) | The Treasury may by order amend subsection (2).”. |
| |
(5) | After section 640 insert— |
| |
“640A | Lump sums provided under armed forces early departure scheme |
| 40 |
No liability to income tax arises on a lump sum provided under a |
| |
scheme established by the Armed Forces Early Departure Payments |
| |
Scheme Order 2005 (S.I. 2005/437).”. |
| |
|
| |
|
| |
|
(6) | In section 641 (exemption from income tax for armed forces disability pensions |
| |
etc), after paragraph (g) of subsection (1) insert— |
| |
“(h) | a benefit under a scheme established by an order under section |
| |
1(2) of the Armed Forces (Pensions and Compensation) Act |
| |
2004 payable to a person by reason of his illness or injury— |
| 5 |
(i) | by way of a lump sum, or |
| |
(ii) | following the termination of the person’s service in the |
| |
armed forces or reserve forces.”. |
| |
(7) | The amendment made by subsection (2) has effect for the year 2005-06. |
| |
(8) | The amendments made by subsections (3) and (4) are deemed always to have |
| 10 |
| |
(9) | The amendments made by subsections (5) and (6) have effect for the year 2005- |
| |
06 and subsequent years of assessment. |
| |
| |
Employment-related securities |
| 15 |
20 | Research institution spin-out companies |
| |
(1) | In Part 7 of ITEPA 2003 (employment income: income and exemptions relating |
| |
to securities), after Chapter 4 insert— |
| |
| |
Shares in research institution spin-out companies |
| 20 |
| |
451 | Application of this Chapter |
| |
(1) | This Chapter applies where— |
| |
(a) | an agreement is made for one or more transfers of intellectual |
| |
property (an “intellectual property agreement”) from one or |
| 25 |
more research institutions to a company (a “spin-out |
| |
| |
(b) | a person acquires shares (or an interest in shares) in the spin-out |
| |
company before the intellectual property agreement is made or |
| |
within the period of 183 days beginning with the date on which |
| 30 |
| |
(c) | the right or opportunity to acquire the shares (or interest in |
| |
shares) was available by reason of employment by the research |
| |
institution (or any of them) or by the spin-out company, and |
| |
(d) | the person is involved in research in relation to any of the |
| 35 |
intellectual property that is the subject of the intellectual |
| |
| |
(2) | But this Chapter does not apply if the avoidance of tax or national |
| |
insurance is the main purpose (or one of the main purposes) of the |
| |
arrangements under which the right or opportunity to acquire the |
| 40 |
shares (or interest in shares) is made available. |
| |
|
| |
|
| |
|
Tax relief on acquisition |
| |
452 | Market value on acquisition |
| |
(1) | For the relevant tax purposes the market value of the shares (or interest |
| |
in shares) at the time of the acquisition is to be calculated disregarding |
| |
the effect on that market value of the intellectual property agreement |
| 5 |
and any transfer of intellectual property pursuant to it. |
| |
(2) | For the purposes of subsection (1) “the relevant tax purposes” are— |
| |
(a) | determining any amount that is to constitute earnings from the |
| |
employment under Chapter 1 of Part 3 (earnings), |
| |
(b) | determining the amount of any gain realised on the occurrence |
| 10 |
of an event that is a chargeable event by virtue of section |
| |
| |
(c) | operating Chapter 3C of this Part (acquisition of securities for |
| |
less than market value), and |
| |
(d) | determining any amount that counts as employment income of |
| 15 |
the employee under Chapter 5 of this Part (securities acquired |
| |
pursuant to securities option). |
| |
Tax relief following acquisition |
| |
453 | Taxable amount under Chapter 4 |
| |
(1) | If the shares are (or interest in shares is) acquired before the intellectual |
| 20 |
property agreement is made, or before any transfer of intellectual |
| |
property pursuant to it, and any benefit deriving from the intellectual |
| |
property agreement or any such transfer is received by the employee in |
| |
connection with the shares (or interest in shares), the taxable amount |
| |
determined under section 448 (post-acquisition benefits from |
| 25 |
securities: amount of charge) is to be treated as nil. |
| |
(2) | But this section does not apply if something which affects the shares (or |
| |
interest in shares) has been done (at or before the time when the |
| |
intellectual property agreement is made or intellectual property is |
| |
transferred) as part of a scheme or arrangement the main purpose (or |
| 30 |
one of the main purposes) of which is the avoidance of tax or national |
| |
| |
Disapplication of Chapters 2 and 3B |
| |
454 | Deemed election for disapplication of Chapter 2 |
| |
(1) | If the shares are restricted securities (or the interest in shares is a |
| 35 |
restricted interest in securities), the employer and the employee are to |
| |
be treated as making an election under section 431(1) (election for |
| |
disapplication of Chapter 2) in relation to the shares (or interest in |
| |
| |
(2) | But the employer and the employee may agree that subsection (1) is not |
| 40 |
to apply in relation to the shares (or interest in shares). |
| |
(3) | An agreement under subsection (2) is irrevocable and— |
| |
(a) | must be made in a form approved by the Board of the Inland |
| |
| |
|
| |
|
| |
|
(b) | may not be made more than 14 days after the acquisition. |
| |
(4) | If the employer and the employee make an agreement under subsection |
| |
(2) in relation to the shares (or interest in shares), subsection (5) applies |
| |
for the purposes of determining the taxable amount for the purposes of |
| |
section 426 (charge on occurrence of chargeable event) on the |
| 5 |
occurrence on any chargeable event in relation to the shares (or interest |
| |
| |
(5) | In determining under section 428(3) (amount of charge) what would |
| |
have been the market value of the shares (or interest in shares) at the |
| |
time of the acquisition but for any restrictions (IUMV), that market |
| 10 |
value is to be calculated disregarding the effect on that market value of |
| |
the intellectual property agreement and any transfer of intellectual |
| |
| |
455 | Disapplication of Chapter 3B |
| |
For the purposes of Chapter 3B (securities with artificially enhanced |
| 15 |
market value) neither the intellectual property agreement nor any |
| |
transfer of intellectual property pursuant to it are things done |
| |
otherwise than for genuine commercial purposes. |
| |
| |
456 | Meaning of “intellectual property” and “transfer” |
| 20 |
(1) | In this Chapter “intellectual property” means— |
| |
(a) | any patent, trade mark, registered design, copyright or design |
| |
right, plant breeders’ rights or rights under section 7 of the Plant |
| |
| |
(b) | any right under the law of a country or territory outside the |
| 25 |
United Kingdom corresponding to, or similar to, a right within |
| |
| |
(c) | any information or technique not protected by a right within |
| |
paragraph (a) or (b) but having industrial, commercial or other |
| |
| 30 |
(d) | any licence or other right in respect of anything within |
| |
paragraph (a), (b) or (c), or |
| |
(e) | any goodwill (having the meaning that it has for accounting |
| |
purposes) associated with anything within paragraphs (a) to |
| |
| 35 |
(2) | The Treasury may by order amend the definition of “intellectual |
| |
property” in subsection (1). |
| |
(3) | For the purposes of this Chapter a transfer of intellectual property |
| |
| |
(a) | a sale of the intellectual property, |
| 40 |
(b) | the grant of a licence or other right in respect of it, and |
| |
(c) | the assignment of a licence or other right in respect of it. |
| |
457 | Meaning of “research institution” |
| |
(1) | In this Chapter “research institution” means— |
| |
|
| |
|
| |
|
(a) | any university or other institution that is a publicly funded |
| |
institution as defined in section 41(2) of the Higher Education |
| |
| |
(b) | any institution that carries out research activities otherwise than |
| |
for profit and that is neither controlled nor wholly or mainly |
| 5 |
funded by a person who carries on activities for profit. |
| |
(2) | The Treasury may by order amend subsection (1) to include in or |
| |
exclude from the definition of “research institution” a person specified |
| |
in the order or persons of a description specified in the order. |
| |
458 | Meaning of “involved in research” |
| 10 |
For the purposes of this Chapter a person is involved in research in |
| |
relation to any intellectual property transferred or to be transferred |
| |
from one or more research institutions if— |
| |
(a) | he has been actively engaged for the research institution (or any |
| |
of them) in connection with research (whether as an employee |
| 15 |
| |
(b) | that research is relevant to anything to which the intellectual |
| |
| |
459 | Transfer of intellectual property by controlled company |
| |
(1) | For the purposes of this Chapter where a research institution has |
| 20 |
control of a company, a transfer of intellectual property from the |
| |
company is to be treated as a transfer from the research institution. |
| |
(2) | For the purposes of this Chapter where two or more research |
| |
institutions together have control of a company, a transfer of |
| |
intellectual property from the company is to be treated as a transfer |
| 25 |
from those research institutions. |
| |
(3) | In this section “control” means control within the meaning of section |
| |
| |
| |
| 30 |
“interest”, in relation to shares, and |
| |
| |
| have the meaning indicated in section 420. |
| |
(2) | In this Chapter “market value” has the meaning indicated in section |
| |
| 35 |
| |
| |
| |
| |
| have the meaning indicated in section 421B(8). |
| 40 |
| |
“restricted interest in securities”, and |
| |
| |
| have the meaning indicated in sections 423 and 424.” |
| |
|
| |
|
| |
|
(2) | In consequence of the amendment made by subsection (1), Chapter 1 of Part 7 |
| |
of ITEPA 2003 (income and exemptions relating to securities: introduction) is |
| |
| |
(3) | Substitute “4A” for “4” in— |
| |
(a) | subsections (1), (4) and (8) of section 421B, |
| 5 |
(b) | the heading of and the heading above that section, and |
| |
(c) | subsections (5) and (6) of section 421D. |
| |
(4) | In section 421K(3)(g) (reportable events), after “securities)” insert “or would |
| |
give rise to such an amount but for Chapter 4A (shares in research institution |
| |
| 10 |
(5) | The amendments made by this section have effect in relation to shares (or an |
| |
interest in shares) acquired before an agreement for the transfer of intellectual |
| |
property is made, or within the period of 183 days beginning with the date on |
| |
which such an agreement is made, if— |
| |
(a) | the date of acquisition of the shares (or interest in shares), or |
| 15 |
(b) | the date on which the agreement was made, |
| |
| or both, fell on or after 2nd December 2004. |
| |
(6) | Where section 454 of ITEPA 2003 (as inserted by subsection (1)) has effect (by |
| |
virtue of subsection (5)) in relation to shares (or an interest in shares) acquired |
| |
before 2nd December 2004, it applies in relation to them (or it) so as to treat the |
| 20 |
election under section 431(1) as made on that date. |
| |
(7) | Where section 454 of ITEPA 2003 (as inserted by subsection (1)) has effect (by |
| |
virtue of subsection (5)) in relation to shares (or an interest in shares) acquired |
| |
before 1st October 2005, it has effect with the substitution in subsection (3)(b) |
| |
of that section of “later than 15th October 2005” for “more than 14 days after the |
| 25 |
acquisition of the shares (or interest in shares)”. |
| |
21 | Research institution spin-out companies: pre-2nd December 2004 cases |
| |
(1) | Subsections (2) to (7) have effect where— |
| |
(a) | Chapter 4A of Part 7 of ITEPA 2003 (as inserted by section 20) would |
| |
apply but for subsection (5) of that section (commencement), and |
| 30 |
(b) | an election is made under this subsection by the employee and the |
| |
employer no later than 15th October 2005. |
| |
(2) | Section 452(1) and (2)(a), (c) and (d) and section 453(1) of ITEPA 2003 apply. |
| |
(3) | But when the chargeable event occurs in relation to the shares (or interest in |
| |
shares), the taxable amount counts as employment income of the employee for |
| 35 |
the tax year in which the chargeable event occurs. |
| |
(4) | The chargeable event occurs in relation to the shares (or interest in shares) on |
| |
| |
(a) | the day on which there is a disposal for consideration of the shares, or |
| |
any interest in them, by an associated person otherwise than to another |
| 40 |
| |
(b) | the day specified in any election made by an employee under this |
| |
| |
(5) | The taxable amount for the purposes of subsection (3) is—![equation: plus[times[char[M],char[V]],minus[times[char[D],char[A]]]]](missing.gif) |
| |
|
| |
|
| |
|
| |
MV is the market value of the shares (or interest in shares) immediately |
| |
before the occurrence of the chargeable event, and |
| |
DA is the total of any deductible amounts. |
| |
(6) | Each of the following is a deductible amount— |
| 5 |
(a) | the amount of any consideration given for the acquisition of the shares |
| |
| |
(b) | any amount that constituted earnings from the employee’s |
| |
employment under Chapter 1 of Part 3 of ITEPA 2003 (earnings) in |
| |
respect of the acquisition of the shares (or interest in shares), |
| 10 |
(c) | any amount that counted as employment income in relation to the |
| |
shares (or interest in shares) under Chapter 2 or 4 of Part 7 of that Act |
| |
as originally enacted otherwise than by virtue of section 457 of that Act |
| |
(as originally enacted) (charge on receipt of chargeable benefit), |
| |
(d) | if the shares (or interest in shares) were (or was) acquired on a |
| 15 |
conversion of other shares (or of another interest in shares), any |
| |
amount that counted as employment income of the employee under |
| |
Chapter 3 of that Part (including that Chapter as originally enacted) |
| |
(convertible securities) by reason of the conversion, |
| |
(e) | if the acquisition of the shares (or interest in shares) was pursuant to a |
| 20 |
securities option, any amount that counted as employment income of |
| |
the employee under section 476 of that Act (or section 476 or 477 as |
| |
originally enacted) (acquisition of securities pursuant to securities |
| |
option) by reason of the acquisition, and |
| |
(f) | in the case of a chargeable event under subsection (4)(a), the amount of |
| 25 |
any expenses incurred by the holder of the shares (or interest in shares) |
| |
in connection with the disposal. |
| |
(7) | An election under subsection (1) or (4) is irrevocable and must be made in a |
| |
form approved by the Board of Inland Revenue. |
| |
(8) | The Treasury may by regulations modify— |
| 30 |
| |
(b) | any provision of Part 4 of TCGA 1992, and |
| |
(c) | any provision of Part 7 of ITEPA 2003, |
| |
| in relation to shares (or interests in shares) to which Chapter 4A of that Part |
| |
would apply but for section 20(5) and which are restricted securities (or |
| 35 |
restricted interests in securities) or convertible securities (or interests in |
| |
| |
(9) | The power conferred by subsection (8) is exercisable by statutory instrument. |
| |
(10) | A statutory instrument containing regulations under subsection (8) is subject |
| |
to annulment in pursuance of a resolution of the House of Commons. |
| 40 |
| |
“associated person” has the same meaning as in Chapters 1 to 5 of Part 7 |
| |
of ITEPA 2003 (see section 421C of that Act), |
| |
“Board of Inland Revenue” has the same meaning as in that Act (see |
| |
section 720(2) of that Act), and |
| 45 |
“convertible securities” has the same meaning as in Chapter 3 of Part 7 of |
| |
that Act (see section 436 of that Act), |
| |
|
| |
|