12For section 299 (disposal of shares) there is substituted—
“299Disposal of shares
(1)Where an individual makes any disposal of eligible shares before the end of the relevant period, then—
(a)if the disposal is made otherwise than by way of a bargain made at arm’s length, any relief attributable to those shares shall be withdrawn, and
(b)in the case of any disposal made by way of a bargain made at arm’s length—
(i)if, apart from this subsection, the relief attributable to those shares is greater than the amount mentioned in subsection (2) below, it shall be reduced by that amount, and
(ii)if sub-paragraph (i) above does not apply, any relief attributable to those shares shall be withdrawn.
(2)The amount referred to in subsection (1) above is an amount equal to tax at the lower rate for the year of assessment for which the relief was given on the amount or value of the consideration which the individual receives for the shares.
(3)Where, in relation to any issue of shares held by any person, the disposal referred to in subsection (1) above is a disposal of part of the shares, that subsection shall apply to the relief that was attributable to that part.
(4)Where an individual’s liability to income tax has been reduced in any year of assessment under section 289A in respect of any issue of shares and the amount of the reduction (“A”) is less than the amount (“B”) which is equal to tax at the lower rate for that year on the amount subscribed for the issue, subsection (2) above shall have effect as if the amount or value referred to in that subsection were reduced by multiplying it by the fraction—
(5)Where an option, the exercise of which would bind the grantor to purchase any shares, is granted to an individual during the relevant period, any relief attributable to the shares to which the option relates shall be withdrawn.
(6)Where any relief is attributable to shares of any class in a company which have been issued to an individual at different times, any disposal by him of shares of that class shall be treated for the purposes of this section as relating to those issued earlier rather than to those issued later.
(7)Where relief is attributable to any shares which have by virtue of any such allotment as is mentioned in section 126(2)(a) of the 1992 Act (not being an allotment for payment) fallen to be treated under section 127 of that Act as the same asset as a new holding, a disposal of the whole or part of the new holding shall be treated for the purposes of this section as a disposal of the whole or a corresponding part of those shares.
(8)For the purposes of this section—
(a)shares in a company shall not be treated as being of the same class unless they would be so treated if dealt with on the Stock Exchange,
(b)references to a disposal of shares include references to the grant of an option the exercise of which would bind the grantor to sell the shares, and
(c)section 312(1A)(a) applies to determine the relevant period.”