Session 2010 - 12
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Other Bills before Parliament


 
 

Public Bill Committee: 12 May 2011                     

44

 

Finance (No. 3) Bill, continued

 
 

David Gauke

 

44

 

Parliamentary Star - white    

Schedule  2,  page  69,  line  10,  leave out ‘(subject to subsection (3))’.

 

David Gauke

 

45

 

Parliamentary Star - white    

Schedule  2,  page  69,  line  12,  after first ‘of’ insert ‘relevant shares or’.

 

David Gauke

 

46

 

Parliamentary Star - white    

Schedule  2,  page  69,  line  16,  leave out ‘(subject to subsection (3))’.

 

David Gauke

 

47

 

Parliamentary Star - white    

Schedule  2,  page  69,  leave out lines 17 and 18.

 

David Gauke

 

48

 

Parliamentary Star - white    

Schedule  2,  page  69,  line  30,  leave out ‘which is three months after’ and insert

 

‘falling immediately after the period of three months starting with’.

 

David Gauke

 

49

 

Parliamentary Star - white    

Schedule  2,  page  70,  line  20,  leave out ‘subsection (11) does not apply’ and insert

 

‘neither subsection (10A) nor subsection (11) applies’.

 

David Gauke

 

50

 

Parliamentary Star - white    

Schedule  2,  page  70,  line  26,  at end insert—

 

‘(10A)    

This subsection applies to any earmarked shares if—

 

(a)    

A receives the shares before the end of the exit period, and

 

(b)    

the receipt of the shares by A gives rise to employment

 

income of A which is chargeable to income tax or which is

 

exempt income.’.

 

David Gauke

 

51

 

Parliamentary Star - white    

Schedule  2,  page  70,  line  28,  leave out ‘(1)(a)’ and insert ‘(1)(a)(ii)’.

 

David Gauke

 

52

 

Parliamentary Star - white    

Schedule  2,  page  70,  line  34,  leave out from ‘shares’ to end of line 38 and insert ‘,

 

or the payment is made from another source and, correspondingly, the shares are no longer

 

held by any person in relation to the award.’.

 

David Gauke

 

53

 

Parliamentary Star - white    

Schedule  2,  page  70,  line  39,  after ‘(10)’ insert ‘, (10A)(a)’.

 

David Gauke

 

54

 

Parliamentary Star - white    

Schedule  2,  page  70,  line  40,  leave out ‘three’ and insert ‘six’.


 
 

Public Bill Committee: 12 May 2011                     

45

 

Finance (No. 3) Bill, continued

 
 

David Gauke

 

55

 

Parliamentary Star - white    

Schedule  2,  page  71,  line  7,  leave out ‘B may grant A a right (“a relevant share

 

option”)’ and insert ‘a right (“a relevant share option”) may be granted to A’.

 

David Gauke

 

56

 

Parliamentary Star - white    

Schedule  2,  page  71,  line  16,  leave out from ‘terms”)’ to ‘the’ in line 21 and insert

 

‘the main purpose of which is to ensure that the relevant share option is not exercisable

 

by A before a specified date (“the vesting date”) which is after the date (“the grant date”)

 

on which the grant is made, while providing that’.

 

David Gauke

 

57

 

Parliamentary Star - white    

Schedule  2,  page  71,  line  24,  leave out ‘five’ and insert ‘ten’.

 

David Gauke

 

58

 

Parliamentary Star - white    

Schedule  2,  page  71,  leave out lines 30 to 34.

 

David Gauke

 

59

 

Parliamentary Star - white    

Schedule  2,  page  71,  line  35,  leave out ‘mentioned in subsection (1)(c)(ii)’ and

 

insert ‘relating to revocation required by subsection (1)(c)’.

 

David Gauke

 

60

 

Parliamentary Star - white    

Schedule  2,  page  71,  line  44,  after ‘providing’ insert ‘relevant’.

 

David Gauke

 

61

 

Parliamentary Star - white    

Schedule  2,  page  71,  line  49,  leave out ‘(subject to subsection (2))’.

 

David Gauke

 

62

 

Parliamentary Star - white    

Schedule  2,  page  72,  line  5,  leave out ‘(subject to subsection (2))’.

 

David Gauke

 

63

 

Parliamentary Star - white    

Schedule  2,  page  72,  line  18,  leave out ‘which is three months after’ and insert

 

‘falling immediately after the period of three months starting with’.

 

David Gauke

 

64

 

Parliamentary Star - white    

Schedule  2,  page  72,  line  20,  after ‘at’ insert ‘the end of’.

 

David Gauke

 

65

 

Parliamentary Star - white    

Schedule  2,  page  73,  line  4,  after ‘before’ insert ‘the end of’.

 

David Gauke

 

66

 

Parliamentary Star - white    

Schedule  2,  page  73,  line  21,  leave out from ‘A’ to end of line 22 and insert ‘—


 
 

Public Bill Committee: 12 May 2011                     

46

 

Finance (No. 3) Bill, continued

 
 

(i)    

which is chargeable to income tax or would be

 

chargeable apart from section 474, or

 

(ii)    

which is exempt income.’.

 

David Gauke

 

67

 

Parliamentary Star - white    

Schedule  2,  page  73,  line  30,  leave out from ‘A’ to ‘and’ in line 31 and insert ‘—

 

(i)    

which is chargeable to income tax or would be

 

chargeable apart from section 474, or

 

(ii)    

which is exempt income,’.

 

David Gauke

 

68

 

Parliamentary Star - white    

Schedule  2,  page  73,  line  33,  leave out from ‘shares’ to end of line 37 and insert ‘,

 

or the payment is made from another source and, correspondingly, the shares are no longer

 

held by any person in relation to the relevant share option.’.

 

David Gauke

 

69

 

Parliamentary Star - white    

Schedule  2,  page  73,  line  42,  leave out from ‘correspondingly,’ to end of line 45

 

and insert ‘the shares are no longer held by any person in relation to the relevant share

 

option.’.

 

David Gauke

 

70

 

Parliamentary Star - white    

Schedule  2,  page  74,  line  3,  leave out from ‘correspondingly,’ to end of line 6 and

 

insert ‘the shares are no longer held by any person in relation to the relevant share option.’.

 

David Gauke

 

71

 

Parliamentary Star - white    

Schedule  2,  page  74,  line  19,  at end insert—

 

‘554LA 

Exclusions: earmarking for employee share schemes (4)

 

(1)    

This section applies if—

 

(a)    

there is an arrangement (“B’s employee share scheme”) under

 

which, in respect of A’s employment with B, a right (“a

 

relevant share option”) may be granted to A—

 

(i)    

to acquire relevant shares, or

 

(ii)    

to receive a sum of money the amount of which is to

 

be determined by reference to the market value of any

 

relevant shares at the time the sum is to be paid,

 

(b)    

the main purpose of the grant of the relevant share option

 

would not be the provision of relevant benefits,

 

(c)    

the relevant shares would be—

 

(i)    

shares (including stock) in, or

 

(ii)    

instruments within paragraph (b) of the definition of

 

“relevant shares” in section 554I(4) issued by,

 

    

a trading company or a company which controls a trading

 

company,

 

(d)    

the grant would be made on terms (“the deferred grant terms”)

 

the main purpose of which is to ensure that the relevant share


 
 

Public Bill Committee: 12 May 2011                     

47

 

Finance (No. 3) Bill, continued

 
 

option is exercisable by A only if a specified exit event, or an

 

exit event within a specified description, occurs, and

 

(e)    

as at the time the grant is made, there would be a reasonable

 

chance that the specified exit event, or an exit event within the

 

specified description, will occur.

 

(2)    

Chapter 2 does not apply by reason of a relevant step within section

 

554B (by reason of which it would otherwise apply) taken by a person

 

(“P”) if—

 

(a)    

the subject of the relevant step is relevant shares (“earmarked

 

shares”) which are earmarked, or otherwise start being held,

 

solely with a view to providing relevant shares, or paying a

 

sum of money, pursuant to—

 

(i)    

a relevant share option granted to A under B’s

 

employee share scheme as mentioned in subsection

 

(1)(a) in relation to which the requirements of

 

subsection (1)(b) to (e) are met, or

 

(ii)    

a relevant share option which is expected to be

 

granted to A under B’s employee share scheme as

 

mentioned in subsection (1)(a) and in relation to

 

which the requirements of subsection (1)(b) to (e)

 

would be met,

 

(b)    

the number of relevant shares of any type which are

 

earmarked shares does not exceed the maximum number of

 

relevant shares of that type which might reasonably be

 

expected to be needed for providing shares, or paying a sum

 

of money, pursuant to the relevant share option which is

 

granted or expected to be granted, and

 

(c)    

there is no connection (direct or indirect) between the relevant

 

step and a tax avoidance arrangement.

 

(3)    

If the relevant step mentioned in subsection (2) is taken in relation to

 

an expected grant of a relevant share option as mentioned in

 

subsection (2)(a)(ii), subsection (4) applies if—

 

(a)    

the grant is not made before the end of the date (“the final

 

grant date”) falling immediately after the period of three

 

months starting with the date on which P takes the relevant

 

step, and

 

(b)    

as at the end of the final grant date, any of the earmarked

 

shares continue to be held by or on behalf of P solely on the

 

basis mentioned in subsection (2)(a).

 

(4)    

This Part has effect as if a relevant step within section 554B were

 

taken at the end of the final grant date—

 

(a)    

the subject of which is—

 

(i)    

the shares which continue to be held as mentioned in

 

subsection (3)(b), and

 

(ii)    

any relevant income in relation to those shares (see

 

subsection (14)), and

 

(b)    

by reason of which Chapter 2 is to apply (subject only to

 

section 554A(4)).

 

(5)    

Subsection (6) applies if, at any time (“the relevant time”)—

 

(a)    

any of the earmarked shares cease to be held by or on behalf

 

of P solely on the basis mentioned in subsection (2)(a), but


 
 

Public Bill Committee: 12 May 2011                     

48

 

Finance (No. 3) Bill, continued

 
 

(b)    

the shares continue to be held by or on behalf of P on the basis

 

mentioned in section 554B(1)(a) or (b).

 

(6)    

This Part has effect as if a relevant step within section 554B were

 

taken at the relevant time—

 

(a)    

the subject of which is—

 

(i)    

the shares mentioned in subsection (5), and

 

(ii)    

any relevant income in relation to those shares (see

 

subsection (14)), and

 

(b)    

by reason of which Chapter 2 is to apply (subject only to

 

section 554A(4)).

 

(7)    

Subsection (8) applies if—

 

(a)    

the relevant step mentioned in subsection (2) is taken in

 

relation to a grant of a relevant share option made as

 

mentioned in subsection (2)(a)(i), or

 

(b)    

the relevant step mentioned in subsection (2) is taken in

 

relation to an expected grant of a relevant share option as

 

mentioned in subsection (2)(a)(ii) and the grant is made before

 

the end of the final grant date,

 

    

and the specified exit event, or an exit event within the specified

 

description, occurs.

 

(8)    

This Part has effect as if a relevant step within section 554B were

 

taken at the end of the exit period—

 

(a)    

the subject of which is—

 

(i)    

any of the earmarked shares to which none of

 

subsections (9) to (11) applies, and

 

(ii)    

any relevant income in relation to any of the

 

earmarked shares mentioned in sub-paragraph (i) (see

 

subsection (14)), and

 

(b)    

by reason of which Chapter 2 is to apply (subject only to

 

section 554A(4)).

 

(9)    

This subsection applies to any earmarked shares if—

 

(a)    

A exercises the relevant share option (wholly or partly) before

 

the end of the exit period and, as a result, receives the shares,

 

and

 

(b)    

the receipt of the shares gives rise to employment income of

 

A—

 

(i)    

which is chargeable to income tax or would be

 

chargeable apart from section 474, or

 

(ii)    

which is exempt income.

 

(10)    

This subsection applies to any earmarked shares if—

 

(a)    

A exercises the relevant share option (wholly or partly) before

 

the end of the exit period and, as a result, a sum of money is

 

paid to A as mentioned in subsection (1)(a)(ii),

 

(b)    

the payment of the sum gives rise to employment income of

 

A—

 

(i)    

which is chargeable to income tax or would be

 

chargeable apart from section 474, or

 

(ii)    

which is exempt income, and


 
 

Public Bill Committee: 12 May 2011                     

49

 

Finance (No. 3) Bill, continued

 
 

(c)    

the payment represents the proceeds of the disposal of the

 

shares, or the payment is made from another source and,

 

correspondingly, the shares are no longer held by any person

 

in relation to the relevant share option.

 

(11)    

This subsection applies to any earmarked shares if—

 

(a)    

the relevant share option becomes exercisable by A before the

 

end of the exit period but the option lapses (in whole or in

 

part) at or before the end of that period, and

 

(b)    

correspondingly, the shares are no longer held by any person

 

in relation to the relevant share option.

 

(12)    

In subsections (8), (9)(a), (10)(a) and (11)(a) “the exit period”

 

means—

 

(a)    

the period of six months starting with the date on which the

 

exit event occurs, or

 

(b)    

if it ends earlier, the period during which the relevant share

 

option is exercisable by A in accordance with the deferred

 

grant terms.

 

(13)    

If the exit event is an event within section 554I(6)(a), in subsection

 

(12)(a) the reference to six months is to be read as a reference to five

 

years.

 

(14)    

In subsections (4)(a)(ii), (6)(a)(ii) and (8)(a)(ii) “relevant income”, in

 

relation to any earmarked shares, means any income—

 

(a)    

which, before the relevant step is treated as being taken by

 

subsection (4), (6) or (8) (as the case may be)—

 

(i)    

arises (directly or indirectly) from the shares, and

 

(ii)    

is the subject of a relevant step within section 554B

 

taken by P by reason of which Chapter 2 would apply

 

apart from section 554P, and

 

(b)    

which, at the time the relevant step is treated as being taken,

 

continues to be held by or on behalf of P on the basis

 

mentioned in section 554B(1)(a) or (b).’.

 

David Gauke

 

72

 

Parliamentary Star - white    

Schedule  2,  page  74,  line  43,  after ‘421E(1),’ insert ‘429, 443,’.

 

David Gauke

 

73

 

Parliamentary Star - white    

Schedule  2,  page  74,  line  44,  at end insert—

 

‘(6A)    

Subsection (6E) applies if there is an acquisition of an asset within

 

section 554C(4)(a) or (b) (“the relevant asset”) and—

 

(a)    

relevant consideration is given by A for the relevant asset of

 

an amount equal to or greater than the market value of the

 

relevant asset at the time of the acquisition, or

 

(b)    

ignoring any relevant consideration given for the relevant

 

asset, the acquisition gives rise (or would give rise) to

 

earnings of A within Chapter 1 of Part 3 from A’s

 

employment with B—


 
 

Public Bill Committee: 12 May 2011                     

50

 

Finance (No. 3) Bill, continued

 
 

(i)    

the amount of which is equal to or greater than the

 

market value of the relevant asset at the time of the

 

acquisition, and

 

(ii)    

which are not exempt income.

 

(6B)    

In subsection (6A) “relevant consideration”—

 

(a)    

means consideration—

 

(i)    

which is given before, or at or about, the time of the

 

acquisition, and

 

(ii)    

which is money or money’s worth, but

 

(b)    

does not include—

 

(i)    

a promise to do anything, or

 

(ii)    

the performance of any duties of, or in connection

 

with, an employment.

 

(6C)    

If section 437(1) or 452(1) applies in relation to the acquisition, or

 

would apply if Chapter 3 or 4A of Part 7 (as the case may be) applied

 

in relation to the acquisition, in subsection (6A) references to the

 

market value of the relevant asset are to be read as references to that

 

value determined on the basis mentioned in section 437(1) or 452(1)

 

(as the case may be).

 

(6D)    

Subsection (6E) also applies if—

 

(a)    

there is an acquisition of an asset within section 554C(4)(a) or

 

(b) (“the relevant asset”),

 

(b)    

the acquisition is pursuant to an employment-related

 

securities option (within the meaning of Chapter 5 of Part 7,

 

but ignoring section 474(1)) acquired by reason of A’s

 

employment, or former or prospective employment, with B,

 

and

 

(c)    

the acquisition is a chargeable event for the purposes of

 

section 476 or would be a chargeable event apart from section

 

474(1).

 

(6E)    

Chapter 2 does not apply by reason of a relevant step taken after the

 

acquisition if—

 

(a)    

the subject of the relevant step is the relevant asset, and

 

(b)    

there is no connection (direct or indirect) between the relevant

 

step and a tax avoidance arrangement.

 

(6F)    

In subsections (6A) to (6E) “acquisition” is to be read in accordance

 

with section 421B(2)(a).’.

 

David Gauke

 

74

 

Parliamentary Star - white    

Schedule  2,  page  75,  line  4,  leave out ‘a share option’ and insert ‘an employment-

 

related securities option (within the meaning of Chapter 5 of Part 7)’.

 

David Gauke

 

75

 

Parliamentary Star - white    

Schedule  2,  page  75,  line  7,  after ‘tax’ insert ‘or would be chargeable apart from

 

section 474’.


 
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Revised 12 May 2011