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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 3 — Eligibility of individuals to participate in scheme

    406

 

          (3)      treated as increased by the number of unissued shares referred to in sub-

paragraph (2)(b).

          (4)      The references in sub-paragraphs (2) and (3) to the shares to be attributed to

an individual are to the shares which—

              (a)             for the purposes of paragraph 12(2) (material interest in share

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capital), and

              (b)             in accordance with paragraph 11(2) (material interest can consist of

or include that of individual’s associates),

                   fall to be brought into account in the individual’s case so that it can be

determined whether their number exceeds 25% of the company’s ordinary

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share capital.

          (5)      In applying paragraph 12 the following are to be disregarded—

              (a)             the interest of the trustees of any approved SIP (within the meaning

of the SIP code: see section 488(4)) in any shares which are held by

them in accordance with the plan but which have not been

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appropriated to, or acquired on behalf of, an individual, and

              (b)             any rights exercisable by the trustees as a result of that interest.

Meaning of “associate”

  14      (1)      In paragraph 11(2) (the “no material interest” requirement) “associate”, in

relation to an individual, means—

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              (a)             any relative or partner of that individual,

              (b)             the trustee or trustees of any settlement in relation to which that

individual, or any of the individual’s relatives (living or dead), is or

was a settlor, or

              (c)             where that individual is interested in any shares or obligations of the

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company mentioned in paragraph 11(2) which are subject to any

trust or are part of the estate of a deceased person—

                    (i)                   the trustee or trustees of the settlement concerned, or

                    (ii)                  the personal representatives of the deceased,

                              as the case may be.

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          (2)      Sub-paragraph (1)(c) needs to be read with paragraphs 15 and 16 (which

relate to employee benefit trusts and discretionary trusts).

          (3)      In this paragraph—

               “relative” means—

                     (a)                    spouse,

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                     (b)                    parent, child or remoter relation in the direct line, or

                     (c)                    brother or sister;

               “settlor” and “settlement” have the same meaning as in Chapter 1A of

Part 15 of ICTA (see section 660G(1) and (2)).

Meaning of “associate”: trustees of employee benefit trust

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  15      (1)      This paragraph applies for the purposes of paragraph 14(1)(c) (meaning of

“associate”: trustees of settlement) where the individual is interested as a

beneficiary of an employee benefit trust in shares or obligations of the

company mentioned in paragraph 11(2).

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 3 — Eligibility of individuals to participate in scheme

    407

 

          (2)      The trustees of the employee benefit trust are not to be regarded as associates

of the individual as a result only of the individual’s being so interested if

neither—

              (a)             the individual, nor

              (b)             the individual together with one or more of the individual’s

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associates, nor

              (c)             any such associate, with or without any other such associates,

                   has at any time after 13th March 1989 been the beneficial owner of, or been

able (directly or through the medium of other companies or by any other

indirect means) to control, more than 25% of the ordinary share capital of the

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company.

          (3)      In sub-paragraph (2)(b) and (c) “associate” has the meaning given by

paragraph 14(1), but does not include the trustees of an employee benefit

trust as a result only of the individual’s having an interest in shares or

obligations of the trust.

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          (4)      Chapter 11 of Part 7 of this Act (which deals with the attribution of interests

in companies to beneficiaries of employee benefit trusts) applies for the

purposes of sub-paragraph (2).

          (5)      In this paragraph “employee benefit trust” has the same meaning as in that

Chapter (see sections 550 and 551).

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Meaning of “associate”: trustees of discretionary trust

  16      (1)      This paragraph applies for the purposes of paragraph 14(1)(c) (meaning of

“associate”: trustees of settlement) where—

              (a)             the individual (“the beneficiary”) is one of the objects of a

discretionary trust,

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              (b)             the property subject to the trust has at any time consisted of, or

included, shares or obligations of the company mentioned in

paragraph 11(2),

              (c)             the beneficiary has ceased to be eligible to benefit under the trust as

a result of—

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                    (i)                   an irrevocable disclaimer or release executed by the

beneficiary, or

                    (ii)                  the irrevocable exercise by the trustees of a power to exclude

the beneficiary from the objects of the trust,

              (d)             immediately after the beneficiary ceased to be so eligible, no

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associate of the beneficiary was interested in the shares or

obligations of the company that were subject to the trust, and

              (e)             during the period of 12 months ending with the date on which the

beneficiary ceased to be so eligible, neither the beneficiary nor any

associate of the beneficiary received any benefit under the trust.

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          (2)      The beneficiary is not, as a result only of the matters referred to in sub-

paragraph (1)(a) and (b), to be regarded as having been interested in the

shares or obligations of the company at any time during that period of 12

months.

          (3)      In sub-paragraph (1) “associate” has the meaning given by paragraph 14(1)

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but with the omission of paragraph (c).

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 4 — Shares to which schemes can apply

    408

 

Part 4

Shares to which schemes can apply

Requirements relating to shares that may be subject to share options: introduction

  17      (1)      An SAYE option scheme must meet the requirements of—

               paragraph 18 (shares must be ordinary shares of certain companies),

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               paragraph 19 (requirements as to listing),

               paragraph 20 (shares must be fully paid up and not redeemable),

               paragraph 21 (only certain kinds of restrictions allowed), and

               paragraph 22 (requirements as to other shareholdings).

          (2)      In this Part “eligible shares” means shares which may be acquired by the

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exercise of share options under the scheme.

Shares must be ordinary shares of certain companies

  18       Eligible shares must form part of the ordinary share capital of—

              (a)             the scheme organiser,

              (b)             a company which has control of the scheme organiser, or

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              (c)             a company which either is, or has control of, a company which is a

member of a consortium owning either the scheme organiser or a

company having control of the scheme organiser.

Requirements as to listing

  19      (1)      Eligible shares must be —

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            (a)            shares of a class listed on a recognised stock exchange,

            (b)            shares in a company which is not under the control of another

company, or

            (c)            shares in a company which is under the control of a listed company.

          (2)      A “listed company” is a company whose shares are listed on a recognised

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stock exchange, other than—

              (a)             a close company, or

              (b)             a company that would be a close company if resident in the United

Kingdom.

Shares must be fully paid up and not redeemable

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  20       Eligible shares must be—

              (a)             fully paid up, and

              (b)             not redeemable.

Only certain kinds of restriction allowed

  21      (1)      Eligible shares must not be subject to any restrictions (see sub-paragraph (4))

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other than—

              (a)             those attaching to all shares of the same class, or

              (b)             those permitted by sub-paragraph (2).

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 4 — Shares to which schemes can apply

    409

 

          (2)      If the conditions of sub-paragraph (3) are met, eligible shares may be subject

to a restriction imposed by the company’s articles of association—

              (a)             requiring all shares held by directors or employees—

                    (i)                   of the company, or

                    (ii)                  of any other company of which it has control,

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                              to be disposed of, or offered for sale, on ceasing to be so held, and

              (b)             requiring all shares acquired, as a result of rights or interests

obtained by such directors or employees, by persons who—

                    (i)                   are not such directors or employees, or

                    (ii)                  have ceased to be such directors or employees,

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                              to be disposed of, or offered for sale, when they are acquired.

          (3)      The conditions of this sub-paragraph are—

              (a)             that a disposal required by the restriction will be by way of sale for a

consideration in money on terms specified in the articles of

association, and

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              (b)             that under general conditions contained in the articles of association

anyone disposing of shares of the same class (whether or not held or

acquired as mentioned in sub-paragraph (2)) may be required to sell

them on terms which are the same as those mentioned in paragraph

(a).

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          (4)      For the purposes of this paragraph shares are subject to a restriction if there

is any contract, agreement, arrangement or condition—

              (a)             by which a person’s freedom to dispose of the shares or of any

interest in them or of the proceeds of their sale, or to exercise any

right conferred by them, is restricted, or

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              (b)             by which such a disposal or exercise may result in any disadvantage

to the person or to a person connected with the person.

                   This is subject to sub-paragraphs (5) and (6).

          (5)      Sub-paragraph (4) does not extend to so much of any contract, agreement,

arrangement or condition as contains provisions similar in purpose and

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effect to any of the provisions of the Model Code as (for the time being) set

out in the listing rules issued by the competent authority for listing in the

United Kingdom under section 74(4) of the Financial Services and Markets

Act 2000 (c. 8).

          (6)      Any discretion of the directors under the articles of association of the

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company to refuse to accept the transfer of shares is to be disregarded for the

purposes of this paragraph if the directors—

              (a)             have undertaken to the Inland Revenue not to exercise it in such a

way as to discriminate against persons participating in the scheme;

and

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              (b)             have notified all those who are eligible to do so of the existence of the

undertaking.

          (7)      In this paragraph “articles of association” includes, in the case of a company

incorporated under the law of a country outside the United Kingdom, any

equivalent document relating to the company.

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Requirements as to other shareholdings

  22      (1)      The majority of the issued shares of the same class as the eligible shares must

be—

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 5 — Requirement for linked savings scheme

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              (a)             employee-control shares, or

              (b)             open market shares,

                   unless the eligible shares are shares in a company whose ordinary share

capital consists of shares of one class only.

          (2)      Shares in a company are “employee-control shares” if—

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              (a)             the persons holding the shares are, by virtue of their holding,

together able to control the company, and

              (b)             those persons are or have been employees or directors of the

company or of another company which is under the control of the

company.

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          (3)      Shares in a company are “open market shares” if the persons holding the

shares are not—

              (a)             persons who acquired their shares as a result of a right conferred on

them or an opportunity afforded to them as a director or employee

of the scheme organiser or any other company, and not as a result of

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an offer to the public, or

              (b)             trustees holding shares on behalf of persons who acquired their

beneficial interests in the shares as mentioned in paragraph (a), or

              (c)             in the case of shares which—

                    (i)                   are not of a class listed on a recognised stock exchange, and

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                    (ii)                  are in a company which is under the control of a listed

company (as defined by paragraph 19(2)),

                              companies which have control of the company whose shares are in

question or of which that company is an associated company.

Part 5

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Requirement for linked savings scheme

Requirements as to linked savings scheme: introduction

  23       An SAYE option scheme must meet the requirements of—

                    paragraph 24 (payments for shares to be linked to approved savings

schemes), and

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                    paragraph 25 (requirements as to contributions to savings schemes).

Payments for shares to be linked to approved savings schemes

  24      (1)      The scheme must provide for shares acquired by the exercise of share

options granted under the scheme to be paid for with money not exceeding

the amount of repayments made and any interest paid under a CCS scheme

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which has been approved by the Inland Revenue for the purposes of this

Schedule (“the CCS scheme”).

          (2)      In the SAYE code “CCS scheme” means certified contractual savings

scheme.

Requirements as to contributions to savings schemes

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  25      (1)      The scheme must provide for a person’s contributions under the CCS

scheme to be of an amount that will secure, as nearly as possible, repayment

of an amount equal to the option price.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 6 — Requirements etc. relating to share options

    411

 

          (2)      The “option price” means the amount payable, on exercising share options

granted under the scheme, in order to acquire the maximum number of

shares that may be acquired under them (see paragraph 28).

          (3)      The scheme must neither—

              (a)             permit the aggregate amount of a person’s contributions under CCS

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schemes linked to approved SAYE schemes to exceed £250 per

month, nor

              (b)             impose a minimum on the amount of a person’s contributions which

exceeds £10 per month.

          (4)      The Treasury may by order amend sub-paragraph (3) by substituting for any

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amount for the time being specified there an amount specified in the order.

Repayments under a savings scheme: whether bonuses included

  26      (1)      For the purposes of this Schedule repayments under a CCS scheme may be

taken as including, or as not including, a bonus.

          (2)      The bonus may either be the maximum bonus under that scheme or a lesser

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bonus.

          (3)      An SAYE option scheme must require the question whether repayments are

to be taken as including bonuses to be determined at the time when share

options are granted.

Part 6

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Requirements etc. relating to share options

Requirements etc. relating to share options: introduction

  27      (1)      An SAYE option scheme must meet the requirements of—

               paragraph 28 (requirements as to price for acquisition of shares),

               paragraph 29 (share options must not be transferable),

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               paragraph 30 (time for exercising options: general),

               paragraph 31 (requirement to have a “specified age”),

               paragraph 32 (exercise of options: death),

               paragraph 33 (exercise of options: reaching specified age without

retiring), and

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               paragraph 34 (exercise of options: scheme-related employment ends).

          (2)      An SAYE option scheme may make any provision authorised by—

               paragraph 36 (exercise of options: employment in associated company

at bonus date), and

               paragraph 37 (exercise of options: company events).

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Requirements as to price for acquisition of shares

  28      (1)      The price at which shares may be acquired by the exercise of a share option

granted under the scheme—

              (a)             must be stated at the time when the option is granted, and

              (b)             must not be manifestly less than 80% of the market value of shares of

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the same class at that time.

           This is subject to sub-paragraphs (2) and (3).

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 3 — Approved SAYE option schemes
Part 6 — Requirements etc. relating to share options

    412

 

          (2)      The Inland Revenue and the scheme organiser may agree in writing that

sub-paragraph (1)(b) is to apply as if the reference to the time when the

option is granted were to an earlier time or times stated in the agreement.

          (3)      The scheme may provide for one or more of the following—

              (a)             the price at which shares may be acquired by the exercise of a share

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option granted under the scheme,

              (b)             the number of shares which may be so acquired, or

              (c)             the description of shares which may be so acquired,

                   to be varied so far as necessary to take account of a variation in the share

capital of which the shares form part.

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          (4)      But the scheme must provide that no such variation is to be made without

the prior approval of the Inland Revenue.

Share options must not be transferable

  29      (1)      The scheme must ensure that share options granted to a participant are not

capable of being transferred by the participant.

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          (2)      Paragraph 32 provides for the exercise of the options where the participant

has died.

Time for exercising options: general

  30      (1)      The scheme must ensure that share options granted under it must not be

capable of being exercised—

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              (a)             before the bonus date, or

              (b)             later than 6 months after that date.

          (2)      However, in sub-paragraph (1)—

              (a)             paragraph (a) is subject to paragraphs 32 to 34 and 37 (exercise of

options in the event of death, reaching the specified age without

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retiring, scheme-related employment ending or certain events

occurring in relation to the company); and

              (b)             paragraph (b) is subject to paragraph 32.

          (3)      In the SAYE code “the bonus date” means the date on which repayments

under the CCS scheme are due.

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          (4)      For this purpose repayments are to be regarded as due as follows—

              (a)             if the repayments are to be taken as including the maximum bonus

(see paragraph 26(2)), on the earliest date on which that bonus is

payable, and

              (b)             in any other case, on the earliest date on which a bonus is payable.

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Requirement to have a “specified age”

  31      (1)      The scheme must specify the age that is to be the specified age for the

purposes of the scheme (see paragraphs 33(1)and 34(2)).

          (2)      The age specified must be—

              (a)             the same for men and women,

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              (b)             not less than 60, and

              (c)             not more than 75.

 

 

 
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