Part 3Income tax, corporation tax and capital gains tax

Chapter 4Personal taxation

Employment-related securities and options

86Shares in employee-controlled companies and unconnected companies

1

Each of the provisions of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (employment income: securities) specified in subsection (2) (exception from charges for certain company shares) is amended in accordance with subsections (3) to (5).

2

The provisions are—

a

section 429 (restricted securities),

b

section 443 (convertible securities),

c

section 446R (securities acquired for less than market value), and

d

section 449 (post-acquisition benefits from securities).

3

In subsection (1) of each of those sections, after paragraph (b) (but before the word “and” where that word features at the end) insert—

ba

subsection (1A) is satisfied,

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5

In subsection (4) of sections 429, 443 and 446R, and in subsection (3) of section 449, for the words after “are not” substitute “ employment-related securities. ”; and accordingly omit sections 429(5), 443(5), 446R(5) and 449(4).

6

In Chapter 3A of that Part of that Act (securities with artificially depressed market value), after section 446I insert—

446IADisapplication of exceptions from charges

1

Section 429 (exception from charge under section 426 for certain company shares) does not prevent section 426 (restricted securities: chargeable events) applying in relation to an event if section 446E or 446I(1)(a) would have effect in relation to the event.

2

Section 443 (exception from charge under section 438 for certain company shares) does not prevent section 438 (convertible securities: chargeable events) applying in relation to an event if section 446G, 446H or 446I(1)(b) would have effect in relation to the event.

3

Section 446R (exception from charge under Chapter 3C for certain company shares) does not prevent that Chapter (securities acquired for less than market value) applying in relation to employment-related securities if section 446B would have effect in relation to them.

4

Section 449 (exception from charge under Chapter 4 for certain company shares) does not prevent that Chapter (benefits from securities) applying in relation to a benefit if section 446I(1)(e) would have effect in relation to the benefit.

7

In Chapter 3B of that Part of that Act (securities with artificially enhanced market value), after section 446N insert—

446NADisapplication of exceptions from charges

1

None of the provisions specified in subsection (2) (exceptions from charges for certain company shares) apply in relation to employment-related securities if the market value of the employment-related securities at the time of the acquisition has been increased by at least 10% by non-commercial increases within the period of 7 years ending with the acquisition.

2

The provisions are—

a

section 429 (restricted securities),

b

section 443 (convertible securities),

c

section 446R (securities acquired for less than market value), and

d

section 449 (post-acquisition benefits from securities).

3

If section 446L (market value on valuation date increased by more than 10% by non-commercial increases during relevant period) applies in relation to employment-related securities, section 429 does not subsequently apply in relation to the employment-related securities.

8

This section applies on and after 7th May 2004.