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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 7 — Employment income: share-related income

    549

 

  70       Nothing in paragraph 91(4) of Schedule 2 to this Act (jointly owned

companies) prevents a company being a constituent company in a group

plan (within the meaning of that Schedule) if it was a participating company

in that plan (within the meaning of Schedule 8 to FA 2000) immediately

before 24th July 2002.

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Approved SAYE option schemes

  71      (1)      This paragraph applies where, immediately before 6th April 2003, a savings-

related share option scheme was approved under Schedule 9 to ICTA

(approved share option schemes and profit-sharing schemes).

          (2)      On and after that date the scheme is to be treated as an SAYE option scheme

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approved by the Inland Revenue under Schedule 3 to this Act.

          (3)      Sub-paragraph (2) has effect even if the provisions of the scheme do not

wholly conform with the provisions of Schedule 3 to this Act, but it has effect

without prejudice to—

              (a)             paragraphs 42 and 43 of that Schedule (withdrawal or loss of

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approval), and

              (b)             any approved alteration of the scheme.

          (4)      For the purposes of paragraph 42 of Schedule 3, as it applies to the scheme,

nothing is to be regarded as a disqualifying event if it would not have

resulted in any of the former approval requirements ceasing to be met.

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                   The “former approval requirements” means the requirements of Schedule 9

to ICTA by reference to which the scheme was approved.

          (5)      Nothing in this Act affects the validity of—

              (a)             any provision of the scheme which was included in it at any time

before 6th April 2003 in accordance with the provisions of Schedule

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9 to ICTA as then in force, or

              (b)             any rights obtained under the scheme which were obtained at any

such time in accordance with the provisions of that Schedule as then

in force.

          (6)      In this paragraph “savings-related share option scheme” has the meaning

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given by paragraph 1(1) of Schedule 9 to ICTA.

  72      (1)      Any reference in the SAYE code to a share option granted in accordance with

the provisions of an approved SAYE option scheme is to be read as

including, in relation to times before 6th April 2003, a reference to a right to

acquire shares obtained in accordance with the provisions of a savings-

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related share option scheme approved under Schedule 9 to ICTA.

          (2)      Any reference in a scheme within paragraph 71(1) to a person chargeable to

tax under Case I of Schedule E is to be read as including, in relation to times

after 5th April 2003, a reference to a person whose earnings fall within

paragraph 6(2)(c) of Schedule 3 to this Act.

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          (3)      This paragraph—

              (a)             is without prejudice to Part 1 of this Schedule, and

              (b)             applies only in so far as the context permits.

          (4)      In this paragraph “savings-related share option scheme” has the same

meaning as in paragraph 71.

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Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 7 — Employment income: share-related income

    550

 

Approved CSOP schemes

  73      (1)      This paragraph applies where, immediately before 6th April 2003, a

discretionary share option scheme was approved under Schedule 9 to ICTA

(approved share option schemes and profit-sharing schemes).

          (2)      On and after that date the scheme is to be treated as a CSOP scheme

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approved by the Inland Revenue under Schedule 4 to this Act.

          (3)      Sub-paragraph (2) has effect even if the provisions of the scheme do not

wholly conform with the provisions of Schedule 4 to this Act, but they are

without prejudice to—

              (a)             paragraphs 30 and 31 of that Schedule (withdrawal or loss of

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approval), and

              (b)             any approved alteration of the scheme.

          (4)      For the purposes of paragraph 30 of Schedule 4, as it applies to the scheme,

nothing is to be regarded as a disqualifying event if it would not have

resulted in any of the former approval requirements ceasing to be met.

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                   The “former approval requirements” means the requirements of Schedule 9

to ICTA by reference to which the scheme was approved.

          (5)      Nothing in this Act affects the validity of—

              (a)             any provision of the scheme which was included in it at any time

before 6th April 2003 in accordance with the provisions of Schedule

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9 to ICTA as then in force, or

              (b)             any rights obtained under the scheme which were obtained at any

such time in accordance with the provisions of that Schedule as then

in force.

          (6)      In this paragraph “discretionary share option scheme” means a share option

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scheme other than a savings-related share option scheme (as defined by

paragraph 1(1) of Schedule 9 to ICTA).

  74      (1)      Any reference in the CSOP code to a share option granted in accordance

with the provisions of an approved CSOP scheme is to be read as including,

in relation to times before 6th April 2003, a reference to a right to acquire

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shares obtained in accordance with the provisions of a discretionary share

option scheme approved under Schedule 9 to ICTA.

          (2)      This paragraph—

              (a)             is without prejudice to Part 1 of this Schedule,

              (b)             applies only in so far as the context permits, and

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              (c)             has effect subject to paragraph 75.

          (3)      In this paragraph “discretionary share option scheme” has the same

meaning as in paragraph 73.

  75      (1)      This paragraph has effect where, immediately before 6th April 2003, a

discretionary share option scheme which was approved before 29th April

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1996—

              (a)             is approved under Schedule 9 to ICTA, and

              (b)             has effect subject to the modifications made by paragraphs 2 and 3 of

Schedule 16 to FA 1996 (scheme to have effect, despite anything

included in it to the contrary, as if it contained provisions required

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by paragraphs 28 and 29 of Schedule 9 to ICTA: limit of £30,000 on

value of shares subject to outstanding options and requirements as

to price for acquisition of shares).

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 7 — Employment income: share-related income

    551

 

          (2)      On and after 6th April 2003 the scheme is to continue to have effect as if it

provided—

              (a)             that an individual may not be granted share options under it which

would at the time when they are granted cause the aggregate market

value of the shares which the individual may acquire by exercising

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share options granted under—

                    (i)                   the scheme, or

                    (ii)                  any other approved CSOP scheme established by the scheme

organiser or an associated company of the scheme organiser,

                              to exceed or further exceed £30,000 (leaving out of account share

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options that have already been exercised), and

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

share option granted under the scheme must not be manifestly less

than the market value of shares of the same class at that time (or, if

the Board of Inland Revenue and the scheme organiser agree in

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writing, at an earlier time or times stated in the agreement).

          (3)      For the purposes of sub-paragraph (2)(a), the market value of shares is to be

calculated as at—

              (a)             the time when the options relating to them were granted, or

              (b)             if an agreement relating to them has been made under paragraph 22

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of Schedule 4 (requirements as to price for acquisition of shares) the

earlier time or times stated in the agreement.

          (4)      Sub-paragraph (2) is subject to any amendment to the scheme made after

28th April 1996 (whether before or after 6th April 2003).

          (5)      In this paragraph “discretionary share option scheme” has the same

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meaning as in paragraph 73.

          (6)      Other expressions used in this paragraph and contained in the index at the

end of Schedule 4 (index of expressions defined in the CSOP code) have the

meaning indicated by that index.

  76      (1)      This paragraph applies to any right obtained by an individual—

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              (a)             under a discretionary share option scheme approved under

Schedule 9 to ICTA, and

              (b)             during the period beginning with 17th July 1995 and ending with

28th April 1996,

                   if, by virtue of section 115 of FA 1996 (transitional provisions which gave

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retrospective effect to certain amendments relating to discretionary share

option schemes), the right was, immediately before 6th April 2003, treated

for the purposes of sections 185 to 187 of and Schedule 9 to ICTA as having

been obtained otherwise than in accordance with the provisions of a

discretionary share option scheme approved under that Schedule.

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          (2)      For the purposes of the CSOP code, the right is to be treated as having been

granted otherwise than in accordance with the provisions of an approved

CSOP scheme.

          (3)      In this paragraph “discretionary share option scheme” has the same

meaning as in paragraph 73.

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Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 7 — Employment income: share-related income

    552

 

Enterprise management incentives

  77      (1)      This paragraph applies where, immediately before 6th April 2003, a share

option was a qualifying option for the purposes of Schedule 14 to FA 2000

(enterprise management incentives).

          (2)      On and after that date the share option is to be treated as a qualifying option

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for the purposes of the EMI code.

          (3)      Sub-paragraph (2) has effect even if the requirements that had to be met in

order for the share option, or any share option replaced by it, to be a

qualifying option for the purposes of Schedule 14 to FA 2000 differed to any

extent from those set out in Schedule 5.

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          (4)      In this paragraph “share option” means a right to acquire shares.

  78      (1)      In section 535 (disqualifying events relating to employee), subsections (2) to

(6) apply to the tax year 2003-04 and later tax years (in accordance with

section 723(1)).

          (2)      In Schedule 14 to FA 2000 (enterprise management incentives), paragraph 52

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(disqualifying events: actual relevant working time) continues to apply in

relation to April 2003 for the purpose of calculating, in accordance with sub-

paragraphs (3) to (5) of that paragraph, whether a disqualifying event is to

be taken to have occurred at the end of the tax year 2002-03.

          (3)      If a disqualifying event is to be taken to have so occurred, it (like anything

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else which under that Schedule is a disqualifying event immediately before

6th April 2003) is a disqualifying event for the purposes of Schedule 5 to this

Act.

  79      (1)      Section 536 (other disqualifying events) has effect in relation to any

alteration made to the share capital of a company before 11th May 2001 with

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the following modification.

          (2)      In subsection (1), for paragraphs (b) and (c) substitute—

                                          “(b) any alteration to the share capital of the relevant

company to which section 537 applies and is made without

the prior approval of the Inland Revenue;”.

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  80      (1)      Section 537 (alteration of share capital for purposes of section 536) has effect

in relation to any alteration made to the share capital of a company before

11th May 2001 with the following modifications.

          (2)      In subsection (1), omit “and (c)”.

          (3)      In subsection (2), substitute “This section” for “This subsection”.

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          (4)      Omit subsection (3).

  81       In a case where the qualifying option was granted before 6th April 2003,

section 540(2) (no charge on acquisition of shares as taxable benefit) applies

in relation to the time when the option was granted with the substitution of

“the employee was chargeable to tax under Case I of Schedule E” for the

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words from “the earnings” onwards.

  82      (1)      This paragraph relates to the operation of section 541(2) (effects on tax

charges where shares cease to be conditional only or are converted) in

relation to an FA 2000 option which was exercised before 6th April 2003.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 8 — Approved profit sharing schemes

    553

 

          (2)      The references to a qualifying option include an FA 2000 option which was

so exercised; but in relation to such an option sub-paragraph (3) applies

instead of section 541(3).

          (3)      For the purposes of section 541(2) “the amount of relief on the exercise of the

option” means the difference between—

5

              (a)             the amount on which tax would have been chargeable under section

135 of ICTA (charge on exercise etc. of option) in respect of the

exercise of the option apart from Schedule 14 to FA 2000 (enterprise

management incentives), and

              (b)             the amount (if any) in fact so chargeable in accordance with that

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Schedule.

          (4)      In this paragraph an “FA 2000 option” means a qualifying option for the

purposes of Schedule 14 to FA 2000.

  83       In Schedule 5 (enterprise management incentives), paragraph 41(6) (like

other provisions of that paragraph) applies to replacement options

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whenever granted.

Employee benefit trusts

  84       In relation to times before 6th April 2003, section 549(5) (definition of

“employee” for purposes of Chapter 11 of Part 7) is to be read as referring to

a person holding an office or employment whose emoluments were

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chargeable under Schedule E.

Part 8

Approved profit sharing schemes

Trustees’ duty to provide information

  85       Any obligation imposed in accordance with paragraph 34(b) of Schedule 9

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to ICTA (trustees’ duties to provide information) on the trustees of a profit

sharing scheme approved under that Schedule is to be construed as an

obligation, where an amount counts as employment income of a participant

by reason of the occurrence of any event, to inform the participant of any

facts relevant to determining the participant’s resulting liability to tax.

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Share incentive plans

  86      (1)      Where the trustees of an approved share incentive plan acquire shares from

the trustees of an approved profit sharing scheme, the disposal and the

acquisition by the trustees are treated for capital gains tax purposes as being

made for such consideration as to secure that neither a gain nor a loss

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accrues on the disposal.

          (2)      In such a case the relevant period for the purposes of paragraph 2 of

Schedule 7D to TCGA 1992 is determined as if the shares had been acquired

by the trustees of the share incentive plan at the time they were acquired by

the trustees of the other trust.

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                   This does not affect the date on which the trustees of the share incentive plan

are treated as acquiring the shares for the purposes of taper relief.

          (3)      In this paragraph—         

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 10 — PAYE

    554

 

               “approved profit sharing scheme” means a profit sharing scheme

approved under Schedule 9 to ICTA, and

               “approved share incentive plan” means a share incentive plan

approved under Schedule 2 to this Act.

Other share schemes: eligibility of individuals and material interests

5

  87      (1)      In applying any of the provisions specified in sub-paragraph (2) (which deal

with the meaning of “material interest” for the purpose of determining

eligibility to participate in share schemes, etc.) the following are to be

disregarded—

              (a)             the interest of the trustees of any profit sharing scheme approved

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under Schedule 9 to ICTA in any shares which are held by them in

accordance with the plan but which have not been appropriated to

an individual, and

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

          (2)      The provisions referred to in sub-paragraph (1) are—

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            (a)            paragraph 20 of Schedule 2 (approved share incentive plans);

            (b)            paragraph 12 of Schedule 3 (approved SAYE option schemes);

            (c)            paragraph 10 of Schedule 4 (approved CSOP schemes);

            (d)            paragraph 29 of Schedule 5 (enterprise management incentives).

Part 9

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Social Security income

Disabled person’s and working families’ tax credits

  88      (1)      This paragraph applies if, on 6th April 2003, the repeals made by TCA 2002

of the provisions listed in sub-paragraph (3) have not come fully into force.

          (2)      Until the repeal of those provisions has come fully into force, Table B in

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section 677(1) of this Act is to be read as if it included references to disabled

person’s tax credit and working families’ tax credit.

          (3)      The provisions referred to in this paragraph are—

              (a)             in SSCBA 1992, section 128 (working families’ tax credit) and section

129 (disabled person’s tax credit), and

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              (b)             in SSCB(NI)A 1992, section 127 (working families’ tax credit) and

section 128 (disabled person’s tax credit).

Part 10

PAYE

PAYE regulations

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  89      (1)      In relation to any time before the commencement of the repeals in Part VII

of Schedule 20 to FA 1999, section 684(2) (PAYE regulations) has effect with

the following modification.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 11 — Consequences for corporation tax

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          (2)      At the end of item 5 insert “including the proving of the contents or

transmission of anything that the regulations allow to be transmitted to any

person in electronic form or by electronic means”.

Part 11

Consequences for corporation tax

5

  90      (1)      This paragraph applies where—

              (a)             a company is charged to corporation tax by reference to an

accounting period which begins before and ends on or after 6th April

2003, and

              (b)             because of a change in the law made by this Act, the income tax law

10

relating to the accounting period is different from what it would

have been if that change had not been made.

          (2)      If the company so elects, this Act applies with such modifications as may be

necessary to secure that the income tax law relating to the accounting period

is the same as it would have been if the change in the law had not been made.

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          (3)      An election under this paragraph must be made by notice given to the Inland

Revenue no later than the end of the period of two years beginning with the

day following the last day of the accounting period.

          (4)      In this paragraph “income tax law” has the same meaning as in section 9 of

ICTA.

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  91      (1)      This paragraph applies in relation to corporation tax charged by reference to

an accounting period which begins before and ends on or after 6th April

2003.

          (2)      In its application for the purposes of corporation tax, any provision of this

Schedule is to be read as if—

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              (a)             any reference to the tax year 2003-04 were a reference to that

accounting period, and

              (b)             any reference to 6th April 2003 were a reference to the first day of that

accounting period.

  92      (1)      The provisions of this Act mentioned in sub-paragraph (2) do not have effect

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for corporation tax purposes for so much of any accounting period as falls

before 6th April 2003.

          (2)      The provisions are—

              (a)             in Schedule 6 (consequential amendments)—

                    (i)                   paragraph 11 (which replaces references in section 84A of

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ICTA to share option schemes approved under Schedule 9 to

that Act with references to SAYE option schemes and CSOP

schemes approved under this Act), and

                    (ii)                  paragraphs 12 and 109 (which insert Schedule 4AA to ICTA

(share incentive plans: corporation tax deductions)), and

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              (b)             the repeal by Schedule 8 (repeals) of—

                    (i)                   Part 12 of Schedule 8 to FA 2000 (corporation tax deductions

in relation to employee share option plans), and

                    (ii)                  so much of any other provision of Schedule 8 to that Act as is

necessary for the operation of Part 12.

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