Textual Amendments
F1Word in Sch. 2 title omitted (6.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 8 paras. 14, 89 (with Sch. 8 paras. 90-96)
86(1)In this Part of this Schedule a “company reconstruction” means a transaction to which this paragraph applies.U.K.
(2)This paragraph applies to a transaction which occurs in relation to any of a participant’s plan shares (“the original holding”) and—
(a)results in a new holding being equated with the original holding for the purposes of capital gains tax, or
(b)would have that result but for the fact that what would be the new holding consists of or includes a qualifying corporate bond.
(3)But where an excluded issue of shares is made—
(a)that issue of shares does not by itself count as a transaction within sub-paragraph (2); and
(b)if made as part of a transaction within that sub-paragraph (that is, as part of a company reconstruction), the shares issued are to be regarded as not forming part of the new holding.
(4)An “” means an issue of shares of any of the following descriptions (in respect of which a charge to income tax arises)—
(a)redeemable shares or securities issued as mentioned in [F2paragraph C or D in section 1000(1) of CTA 2010] (distributions);
(b)share capital issued in circumstances such that [F3section 1022(3) of CTA 2010] (bonus issues) applies;
(c)share capital to which [F4section 410 of ITTOIA 2005 (stock dividends) applies that is issued in a case where subsection (2) or (3) of that section applies.]
Textual Amendments
F2Words in Sch. 2 para. 86(4)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 396(6)(a) (with Sch. 2)
F3Words in Sch. 2 para. 86(4)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 396(6)(b) (with Sch. 2)
F4Words in Sch. 2 para. 86(4)(c) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 396(6)(c) (with Sch. 2)
87(1)In the SIP code references to a participant’s plan shares in relation to a SIP are to be read, after the time of a company reconstruction—U.K.
(a)as referring to the new shares, or
(b)as including those shares,
as the case may be.
This is subject to the following provisions of this paragraph.
(2)For the purposes of the SIP code—
(a)a company reconstruction is to be treated as not involving a disposal of the shares comprised in the original holding;
(b)new shares are to be treated as having been awarded to the participant on the date on which the corresponding old shares were awarded;
(c)the conditions in Part 4 of this Schedule (types of share that may be awarded) are to be treated as fulfilled with respect to any new shares if they were (or were treated as) fulfilled with respect to the corresponding old shares; and
(d)the provisions of—
(i)sections 489 to 514 (SIPs: income tax advantages and charges under this Act),
[F5(ii)sections 392 to 395 and 405 to 408 of ITTOIA 2005 (SIPs: special rules for charges under Chapters 3 and 4 of Part 4 of that Act (dividends etc. from UK or non-UK resident companies etc.)) and section 770 of that Act (exemption for amounts applied by SIP trustees acquiring dividend shares or retained for reinvestment),]
(iii)sections 686B and 686C of ICTA (SIPs: income tax advantages for trustees), and
(iv)Part 1 of Schedule 7D to TCGA 1992 (SIPs: capital gains tax),
apply in relation to the new shares as they would have applied in relation to the corresponding old shares.
(3)If the corresponding old shares were dividend shares, the reference in sub-paragraph (2)(b) to the corresponding old shares being awarded is a reference to those shares being acquired on behalf of the participant.
(4)Sub-paragraphs (1) to (3) are subject to paragraph 88 (treatment of shares acquired under rights issue).
(5)For the purposes of the SIP code if, as part of a company reconstruction, trustees become entitled to a capital receipt, their entitlement to the capital receipt is to be taken to arise before the new holding comes into being.
(6)In the SIP code, in the context of a new holding, “” includes securities and rights of any description which form part of the new holding for the purposes of Chapter 2 of Part 4 of TCGA 1992 (reorganisation of share capital etc.).
(7)In this paragraph—
(a)“” means shares comprised in the new holding which were issued in respect of, or otherwise represent, shares comprised in the original holding;
(b)“the new holding” and “the original holding” mean respectively the new and original holdings mentioned in paragraph 86(2);
(c)“”, in relation to any new shares, means the shares in respect of which the new shares are issued or which the new shares otherwise represent.
Textual Amendments
F5Sch. 2 para. 87(2)(d)(ii) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 617(6) (with Sch. 2)
88(1)This paragraph applies for the purposes of the SIP code where the trustees exercise rights arising under a rights issue and conferred in respect of a participant’s plan shares.U.K.
(2)In such a case, any shares or securities or rights allotted are to be treated as if they were plan shares—
(a)identical to the shares in respect of which the rights were conferred, and
(b)appropriated to, or acquired on behalf of, the participant under the plan in the same way and at the same time as those shares.
(3)If, however, either of the conditions set out in sub-paragraph (4) is met, sub-paragraph (5) applies instead.
(4)The conditions are—
(a)that the funds used by the trustees to exercise the rights are not provided by the exercise of the trustees' powers under paragraph 77 (trustees' powers to raise funds to subscribe for rights issue);
(b)that similar rights are not conferred in respect of all ordinary shares in the company.
(5)If either of those conditions is met—
(a)any shares, securities or rights allotted are not plan shares, and
(b)sections 127 to 130 of TCGA 1992 (reorganisation of share capital etc.) do not apply in relation to them.
89(1)The plan may provide for the company to issue a plan termination notice in respect of the plan in circumstances specified in the plan.U.K.
(2)The plan must provide that, where a plan termination notice is issued, a copy of the notice must be given, without delay, to—
F6(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)the trustees,
(c)each individual who has plan shares, and
(d)each individual who has entered into a partnership share agreement which was in force immediately before the notice was issued.
Textual Amendments
F6Sch. 2 para. 89(2)(a) omitted (6.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 8 paras. 29, 89 (with Sch. 8 paras. 90-96)
90(1)This paragraph applies if the company has issued a plan termination notice under paragraph 89.U.K.
(2)No further shares may be [F7appropriated to, or acquired on behalf of,] individuals under the plan.
(3)The trustees must remove the plan shares from the plan as soon as practicable after whichever is the later of—
(a)the end of the notice period, or
(b)the first date on which the shares may be removed from the plan without giving rise to a charge to income tax under sections 501 to 507 (SIPs: tax charges) on the participant on whose behalf they are held.
(4)In sub-paragraph (3) “the notice period” means the period of 3 months beginning with the date on which the requirements imposed by the plan in accordance with paragraph 89(2) are met in respect of the plan termination notice.
(5)The trustees may remove a participant’s shares from the plan at an earlier date with the participant’s consent.
(6)Any consent given by the participant before receiving a copy of the plan termination notice is to be disregarded for the purposes of sub-paragraph (5).
(7)As soon as practicable after the plan termination notice is issued, the trustees must pay any money held on an individual’s behalf to the individual.
(8)In this paragraph references to the trustees removing the plan shares from the plan are to their doing the following in the case of each participant—
(a)transferring the shares to the participant on behalf of whom they are held, or to another person, at the participant’s direction, or
(b)disposing of the shares and accounting (or holding themselves ready to account) for the proceeds to the participant or to another person at the participant’s direction.
(9)Where a participant has died, the references in this paragraph to a participant are to the participant’s personal representatives.
Textual Amendments
F7Words in Sch. 2 para. 90(2) substituted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 30, 89 (with Sch. 8 paras. 90-96)
91(1)This paragraph applies for the purposes of the provisions of the SIP code relating to group plans.U.K.
(2)Each joint owner of a jointly owned company is to be treated as controlling every company within sub-paragraph (3).
(3)The companies within this sub-paragraph are—
(a)the jointly owned company, and
(b)any company controlled by that company.
(4)However, no company within sub-paragraph (3) may be—
(a)a constituent company in more than one group plan, or
(b)a constituent company in a particular group plan if another company within that sub-paragraph is a constituent company in a different group plan.
(5)In this paragraph a “jointly owned company” means a company—
(a)of which 50% of the issued share capital is owned by one person and 50% by another, and
(b)which is not controlled by any one person.
(6)This paragraph does not apply for the purposes of paragraph 27(1)(b) (requirement that plan shares are in a company not under another company’s control).
92(1)For the purposes of the SIP code the “market value” of shares has the same meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 of that Act.U.K.
[F8(2)For the purposes of this Schedule the market value of shares subject to a restriction is to be determined as if they were not subject to the restriction.]
(3)Where the market value of shares on any date has to be determined for the purposes of the SIP code, [F9an officer of Revenue and Customs] and the trustees may agree that it is to be determined by reference—
(a)to a date or dates, or
(b)to an average of the values on a number of dates,
stated in the agreement.
Textual Amendments
F8Sch. 2 para. 92(2) substituted (with effect in accordance with Sch. 2 para. 58 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 55
F9Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 102(1); S.I. 2005/1126, art. 2(2)(h)
Modifications etc. (not altering text)
C1Sch. 2 para. 92(2) applied by 2005 c. 5, s. 407(3C) (as inserted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 63(3), 89 (with Sch. 8 paras. 90-96))
C2Sch. 2 para. 92(2) applied by 2005 c. 5, s. 394(3C) (as inserted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 57(3), 89 (with Sch. 8 paras. 90-96))
93[F10(1)An officer of Revenue and Customs may by notice require a person to provide the officer with any information—U.K.
(a)which the officer reasonably requires for the performance of any functions of Her Majesty's Revenue and Customs or an officer of Revenue and Customs under the SIP code, and
(b)which the person to whom the notice is addressed has or can reasonably obtain.]
(2)The power conferred by this paragraph extends, in particular, to—
(a)information to enable [F9an officer of Revenue and Customs] —
[F11(i)to check anything contained in a notice under paragraph 81A or a return under paragraph 81B or to check any information accompanying such a notice or return, or”, and]
(ii)to determine the liability to tax, including capital gains tax, of any person who has participated in a plan [F12or any other person whose liability to tax the operation of a plan is relevant to], and
(b)information about the administration of a plan and any proposed alteration of the terms of a plan.
(3)The notice must require the information to be provided within a specified period, which must not end earlier than 3 months after the date when the notice is given.
Textual Amendments
F9Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 102(1); S.I. 2005/1126, art. 2(2)(h)
F10Sch. 2 para. 93(1) substituted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 31(2), 89 (with Sch. 8 paras. 90-96)
F11Sch. 2 para. 93(2)(a)(i) substituted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 31(3)(a), 89 (with Sch. 8 paras. 90-96)
F12Words in Sch. 2 para. 93(2)(a)(ii) inserted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 31(3)(b), 89 (with Sch. 8 paras. 90-96)
94(1)For the purposes of the SIP code one company is an “associated company” of another company at a given time if—U.K.
(a)one has control of the other, or
(b)both are under the control of the same person or persons.
(2)Sub-paragraph (1) does not, however, apply for the purposes of paragraph 29 (prohibited shares).
(3)For the purposes of sub-paragraph (1) the question whether a person controls a company is to be determined in accordance with [F13sections 450 and 451 of CTA 2010].
Textual Amendments
F13Words in Sch. 2 para. 94(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 396(7) (with Sch. 2)
95(1)This paragraph explains what is meant, for the purposes of the SIP code, by a participant ceasing to be in relevant employment.U.K.
(2)For the purposes of the SIP code “relevant employment” means employment by the company or any associated company.
(3)A participant who remains in the employment of the company or any associated company does not cease to be in relevant employment.
96(1)For the purposes of the SIP code plan shares are withdrawn from a SIP when—U.K.
(a)they are transferred by the trustees to the participant, or another person, on the direction of the participant,
(b)the participant assigns, charges or otherwise disposes of the beneficial interest in the shares, or
(c)they are disposed of by the trustees, on the direction of the participant, in circumstances where the trustees account (or hold themselves ready to account) for the proceeds to the participant or to another person.
(2)Where the participant has died, the references in sub-paragraph (1) to the participant are to the participant’s personal representatives.
97(1)For the purposes of the SIP code plan shares cease to be subject to a SIP when—U.K.
(a)they are withdrawn from the plan,
(b)the participant to whom the shares were awarded ceases to be in relevant employment at a time when the shares are subject to the plan, or
(c)the trustees dispose of the shares under provision made in accordance with paragraph 79 (meeting by trustees of PAYE obligations).
(2)If an individual—
(a)participates in an award of partnership shares, and
(b)ceases to be in relevant employment at any time during the acquisition period relating to that award,
the individual is to be treated for the purposes of this paragraph as ceasing to be in relevant employment immediately after the shares are awarded.
(3)In sub-paragraph (2) “the acquisition period” in relation to an award means—
(a)where there was no accumulation period, the period beginning with the deduction of the partnership share money and ending with the acquisition date (as defined by paragraph 50(4)), and
(b)where there was an accumulation period, the period beginning with the end of that period and ending immediately before the acquisition date (as defined by paragraph 52(5)).
(4)If a participant ceases to be in relevant employment, the participant’s plan shares are to be treated as ceasing to be subject to the plan on the date of leaving.
F1498U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F14Sch. 2 para. 98 omitted (17.7.2013) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 5 (with Sch. 2 para. 17)
99(1)In the SIP code—U.K.
“articles of association”, in relation to a company, includes any other written agreement between the shareholders of the company;
“company” means a body corporate;
“group of companies” means a company and any other companies of which it has control, and “group company” has a corresponding meaning;
“”, in relation to a SIP, means plan shares that have been awarded to an individual participant;
“PAYE obligations” means (subject to paragraphs 79(2) and 80(2)) obligations of any person under—
Part 11 of this Act, or
PAYE regulations;
“”, in relation to a SIP, means—
free, partnership or matching shares which have been awarded to participants under the plan,
dividend shares which have been acquired on behalf of participants under the plan, and
shares in relation to which paragraph 87(1) applies (company reconstructions: new shares),
and which (in each case) remain subject to the plan;
“provision for forfeiture” means a provision to the effect that a participant ceases to be beneficially entitled to shares on the occurrence of certain events, and “forfeiture” is to be read accordingly;
“qualifying corporate bond” has the meaning given by section 117 of TCGA 1992;
“redundancy” has the same meaning as in ERA 1996 or ER(NI)O 1996;
“rights arising under a rights issue” means rights conferred in respect of a participant’s plan shares to be allotted, on payment, other shares or securities or rights of any description in the same company.
(2)For the purposes of the SIP code references to “shares” include fractions of shares forming part of the share capital of a company registered in a foreign country the law of which recognises such fractions.
(3)For the purposes of the SIP code a company is a member of a consortium owning another company if it is one of a number of companies—
(a)which between them beneficially own not less than 75% of the other company’s ordinary share capital, and
(b)each of which beneficially owns not less than 5% of that capital.
[F15(4)For the purposes of the SIP code—
(a)shares are subject to a “restriction” if there is any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) of section 423 (restricted securities) would apply if the references in those subsections to the employment-related securities were to the shares, and
(b)the “restriction” is that provision.]
Textual Amendments
F15Sch. 2 para. 99(4) inserted (with effect in accordance with Sch. 2 para. 58 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 56
100U.K.In the SIP code the following expressions are defined or otherwise explained by the provisions indicated below:
| accumulation period | paragraph 51 |
| F16. . . | F16. . . |
| articles of association | paragraph 99(1) |
| associated company | paragraph 94 (and see paragraph 29(3)) |
| award of shares | paragraph 5(1) |
| F17. . . | . . . |
| building society | [F18section 989 of ITA 2007] |
| ceasing to be in relevant employment (in relation to a participant) | paragraph 95 |
| ceasing to be subject to plan (in relation to shares) | paragraph 97 |
| child | [F19section 721(6)] |
| close company | [F20section 989 of ITA 2007] F21... |
| company | paragraph 99(1) |
| the company (in relation to a SIP) | paragraph 2(2) |
| company reconstruction (in Part 11 of this Schedule) | paragraph 86(1) |
| connected person | section 718 |
| consortium (member of) | paragraph 99(3) |
| constituent company | paragraph 4(3) |
| control | section 719 (and see paragraphs 29(5), 37(6) and 94(3)) |
| distribution | [F22section 989 of ITA 2007] |
| dividend shares | paragraph 62(3)(b) |
| earnings | section 62 and see section 721(7) |
| eligible shares (in Part 4 of this Schedule) | paragraph 25(2) |
| employee, employed, employer and employment | section 4 |
| the employment requirement | paragraph 15(3) |
| forfeiture, provision for | paragraph 99(1) |
| free shares | paragraph 2(1)(a) |
| group company | paragraph 99(1) |
| group of companies | paragraph 99(1) |
| group plan | paragraph 4(2) |
| holding period | paragraph 36 (and see paragraph 67) |
| F17. . . | |
| market value (of shares) | paragraph 92 |
| matching shares | paragraph 3(1) |
| notice (except in paragraph 54 or 55) | [F23section 989 of ITA 2007] |
| ordinary share capital | [F24section 989 of ITA 2007] |
| parent company | paragraph 4(1) |
| participant (in relation to a SIP) | paragraph 5(4) |
| participant’s plan shares | paragraph 99(1) (and see paragraph 87(1)) |
| participation in an award of shares | paragraph 5(3) |
| partnership share agreement | paragraph 44 |
| partnership share money | paragraph 45(2) |
| partnership shares | paragraph 2(1)(b) |
| PAYE deduction | section 488(4) |
| PAYE obligations | paragraph 99(1) |
| PAYE regulations | section 684(8) |
| performance allowances | paragraph 34(4) |
| personal representatives | [F25section 989 of ITA 2007] |
| plan requirements (in relation to a SIP) | paragraph 2(2) |
| plan shares (in relation to a SIP) | paragraph 99(1) (and see paragraphs 86 to 88) |
| the plan trust | paragraph 71(3) |
| provision for forfeiture | paragraph 99(1) |
| qualifying corporate bond | paragraph 99(1) |
| qualifying employee | paragraph 8(6) |
| recognised stock exchange | [F26section 1005 of ITA 2007] |
| redundancy | paragraph 99(1) |
| reinvestment | paragraph 62(3)(a) |
| relevant employment | paragraph 95(2) |
| [F27restriction (in relation to shares) | paragraph 99(4)] |
| rights arising under a rights issue | paragraph 99(1) |
| salary | paragraph 43(4) |
| share incentive plan (“SIP”) | section 488(4) |
| [F28Schedule 2 SIP | paragraph 1 and Part 10 of this Schedule] |
| shares | paragraph 99(2) (and in the context of a new holding, paragraph 87(6)) |
| the SIP code | section 488(3) |
| F29. . . | F29. . . |
| F30. . . | F30. . . |
| tax | [F31section 989 of ITA 2007] |
| [F32tribunal | section 989 of ITA 2007] |
| tax year | [F33section 4(2) of ITA 2007 (as applied by section 989 of that Act)] |
| the trustees | paragraphs 2(2), 71(1) |
| the trust instrument | paragraph 71(3) |
| withdrawal of shares from plan | paragraph 96(1) |
Textual Amendments
F16Words in Sch. 2 para. 100 Table omitted (6.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 8 paras. 32(a), 89 (with Sch. 8 paras. 90-96)
F17Sch. 2 para. 100 entry repealed (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 121(e), Sch. 5; S.I. 2005/1126, art. 2(2)(h)(i)
F18Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(a) (with Sch. 2)
F19Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(b) (with Sch. 2)
F20Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(c) (with Sch. 2)
F21Words in Sch. 2 para. 100 Table omitted (with effect in accordance with Sch. 2 para. 38 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 37
F22Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(d) (with Sch. 2)
F23Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(e) (with Sch. 2)
F24Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(f) (with Sch. 2)
F25Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(g) (with Sch. 2)
F26Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(h) (with Sch. 2)
F27Words in Sch. 2 para. 100 Table inserted (with effect in accordance with Sch. 2 para. 58 of the amending Act) by Finance Act 2013 (c. 29), Sch. 2 para. 57
F28Words in Sch. 2 para. 100 Table inserted (6.4.2014) by Finance Act 2014 (c. 26), Sch. 8 paras. 32(b), 89 (with Sch. 8 paras. 90-96)
F29Words in Sch. 2 para. 100 Table omitted (1.4.2009) by virtue of The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 343(2)
F30Words in Sch. 2 para. 100 Table omitted (17.7.2013) by virtue of Finance Act 2013 (c. 29), Sch. 2 para. 6 (with Sch. 2 para. 17)
F31Words in Sch. 2 para. 100 substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 396(8) (with Sch. 2)
F32Words in Sch. 2 para. 100 Table inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 343(3)
F33Words in Sch. 2 para. 100 Table substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 447(3)(j) (with Sch. 2)