Income Tax (Earnings and Pensions) Act 2003

[F1 Relevant steps U.K.

Textual Amendments

F1 Pt. 7A inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 1

554B Relevant steps: earmarking etc of sum of money or asset U.K.

(1) A person (“P”) takes a step within this section if—

(a) a sum of money or asset held by or on behalf of P is earmarked (however informally) by P with a view to a later relevant step being taken by P or any other person (on or following the meeting of any condition or otherwise) in relation to—

(i) that sum of money or asset, or

(ii) any sum of money or asset which may arise or derive (directly or indirectly) from it, or

(b) a sum of money or asset otherwise starts being held by or on behalf of P, specifically with a view, so far as P is concerned, to a later relevant step being taken by P or any other person (on or following the meeting of any condition or otherwise) in relation to—

(i) that sum of money or asset, or

(ii) any sum of money or asset which may arise or derive (directly or indirectly) from it.

(2) For the purposes of subsection (1)(a) and (b) it does not matter—

(a) if details of the later relevant step have not been worked out (for example, details of the sum of money or asset which will or may be the subject of the step or details of how or when or by whom or in whose favour the step will or may be taken),

(b) if any condition which would have to be met before the later relevant step is taken might never be met, or

(c) if A, or any person linked with A, has no legal right to have a relevant step taken in relation to any sum of money or asset mentioned in subsection (1)(a)(i) or (ii) or (b)(i) or (ii) (as the case may be).

(3) For the purposes of subsection (1)(b) it does not matter whether or not the sum of money or asset in question has previously been held by or on behalf of P on a basis which is different to that mentioned in subsection (1)(b).

554C Relevant steps: payment of sum, transfer of asset etc U.K.

(1) A person (“P”) takes a step within this section if P—

(a) pays a sum of money to a relevant person,

[F2 (aa) acquires a right to a payment of a sum of money, or to a transfer of assets, where there is a connection (direct or indirect) between the acquisition of the right and—

(i) a payment made, by way of a loan or otherwise, to a relevant person, or

(ii) a transfer of assets to a relevant person,

(ab) releases or writes off the whole or a part of—

(i) a loan made to a relevant person, or

(ii) an acquired right of the kind mentioned in paragraph (aa),”.]

(b) transfers an asset to a relevant person,

(c) takes a step by virtue of which a relevant person acquires an asset within subsection (4),

(d) makes available a sum of money or asset for use, or makes it available under an arrangement which permits its use—

(i) as security for a loan made or to be made to a relevant person, or

(ii) otherwise as security for the meeting of any liability, or the performance of any undertaking, which a relevant person has or will have, or

(e) grants to a relevant person a lease of any premises the effective duration of which is likely to exceed 21 years.

(2) In subsection (1) “relevant person”—

(a) means A or a person chosen by A or within a class of person chosen by A, and

(b) includes, if P is taking a step on A's behalf or otherwise at A's direction or request, any other person.

(3) In subsection (2) references to A include references to any person linked with A.

[F3 (3A) For the purposes of subsection (1) “loan” includes—

(a) any form of credit, and

(b) a payment that is purported to be made by way of a loan.

(3B) Subsection (3C) applies where a person (“T”) acquires from another person (“L”) (whether or not for consideration)—

(a) a right to payment of the whole or part of a loan where T is the person liable (at the time of the acquisition of the right) to repay the loan, or

(b) a right to payment of a sum of money, or to a transfer of assets, where T is the person liable (at the time of the acquisition of the right) to pay the sum, or transfer the assets.

(3C) L is to be treated for the purposes of subsection (1)(ab) as releasing—

(a) in a case within subsection (3B)(a), the loan or the relevant part of it;

(b) in a case within subsection (3B)(b), the right or the relevant part of it.]

(4) The following assets are within this subsection—

(a) securities,

(b) interests in securities, and

(c) securities options,

as defined in section 420 for the purposes of Chapters 1 to 5 of Part 7; and in subsection (1)(c) “acquires” is to be read in accordance with section 421B(2)(a).

(5) For the purposes of subsection (1)(d)—

(a) references to making a sum of money or asset available are references to making it available in any way, however informal,

(b) it does not matter if the relevant person has no legal right to have the sum of money or asset used as mentioned, and

(c) it does not matter if the sum of money or asset is not actually used as mentioned.

(6) Subsections (7) and (8) apply for the purpose of determining the likely effective duration of a lease of any premises granted to a relevant person (“the original lease”) for the purposes of subsection (1)(e).

(7) If there are circumstances which make it likely that the original lease will be extended for any period, the effective duration of the original lease is to be determined on the assumption that the original lease will be so extended.

(8) Further, if—

(a) A is, or is likely to become, entitled to a later lease, or the grant of a later lease, of the same premises, or

(b) it is otherwise likely that A will be granted a later lease of the same premises,

the original lease is to be treated as continuing until the end of the later lease (and subsection (7) also applies for the purpose of determining the duration of the later lease).

(9) In subsection (8)—

(a) references to A include references to—

(i) any person linked with A, and

(ii) the person to whom the original lease was granted where the original lease was not granted to A or any person linked with A, and

(b) references to the same premises include references to any premises which include the whole or part of the same premises.

(10) In this section “lease” and “premises” have the same meaning as they have in Chapter 4 of Part 3 of ITTOIA 2005.

Textual Amendments

F2 S. 554C(1)(aa)(ab) inserted (with effect in accordance with Sch. 6 para. 13 of the amending Act) by Finance Act 2017 (c. 10), Sch. 6 para. 3(2)

F3 S. 554C(3A)-(3C) inserted (with effect in accordance with Sch. 6 para. 13 of the amending Act) by Finance Act 2017 (c. 10), Sch. 6 para. 3(3)

Modifications etc. (not altering text)

C1 Pt. 7A modified (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 35(6)

C2 Pt. 7A modified (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 1(8)

C3 S. 554C(2)(3) applied (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 1(5)

554D Relevant steps: making asset available U.K.

(1) A person (“P”) takes a step within this section if, without transferring the asset to the relevant person, P—

(a) at any time, makes an asset available for a relevant person to benefit from in a way which is substantially similar to the way in which the relevant person would have been able to benefit from the asset had the asset been transferred to the relevant person at that time, or

(b) at or after the end of the relevant period, makes an asset available for a relevant person to benefit from.

(2) If—

(a) before the end of the relevant period, P makes available an asset for a relevant person to benefit from, and

(b) at the end of the relevant period, P continues to make the asset available for the relevant person to benefit from,

P is treated as taking a step within this section by virtue of subsection (1)(b) at the end of the relevant period.

(3) For the purposes of subsections (1) and (2)—

(a) references to making an asset available are references to making it available in any way, however informal,

(b) it does not matter if the relevant person has no legal right to benefit from the asset, and

(c) it does not matter if the relevant person does not actually benefit from the asset.

(4) In subsections (1) and (2) “the relevant period” means the period of two years starting with the day on which A's employment with B ceases.

(5) In subsections (1) and (2) “relevant person”—

(a) means A or a person chosen by A or within a class of person chosen by A, and

(b) includes, if P is taking a step on A's behalf or otherwise at A's direction or request, any other person.

(6) In subsection (5) references to A include references to any person linked with A.

(7) The following factors (among others) may be taken into account in determining whether a step within this section is taken by virtue of subsection (1)(a)—

(a) any limitations on the way in which the relevant person may benefit from the asset,

(b) the period over which the asset is being made available and (if relevant) the extent to which that period covers the expected remaining useful life of the asset,

(c) the extent to which the relevant person has, or is to have, a say over the disposal of the asset, and

(d) the extent to which the relevant person may benefit from any proceeds arising from the disposal of the asset or otherwise have a say in the way the proceeds are used.]