100U.K.After section 686A insert—
(1)This section applies to income of the trustees of an approved share incentive plan consisting of dividends or other distributions in respect of shares held by them in relation to which the requirements of Part 4 of Schedule 2 to ITEPA 2003 (approved share incentive plans: types of shares that may be awarded) are met.
(2)Income to which this section applies is income to which section 686 applies only if and when—
(a)the period applicable to the shares under the following provisions of this section comes to an end without the shares being awarded to a participant in accordance with the plan, or
(b)if earlier, the shares are disposed of by the trustees.
(3)If any of the shares in the company in question are readily convertible assets at the time the shares are acquired by the trustees, the period applicable to the shares is the period of two years beginning with the date on which the shares were acquired by the trustees.
This is subject to subsection (5).
(4)If at the time of the acquisition of the shares by the trustees none of the shares in the company in question are readily convertible assets, the period applicable to the shares is—
(a)the period of five years beginning with the date on which the shares were acquired by the trustees, or
(b)if within that period any of the shares in that company become readily convertible assets, the period of two years beginning with the date on which they did so,
whichever ends first.
This is subject to subsection (5).
(5)If the shares are acquired by the trustees by virtue of a payment in respect of which a deduction is allowed under paragraph 9 of Schedule 4AA (deduction for contribution to plan trust), the period applicable to the shares is the period of ten years beginning with the date of acquisition.
(6)For the purposes of determining whether shares are awarded to a participant within the period applicable under the above provisions, shares acquired by the trustees at an earlier time are taken to be awarded to a participant before shares of the same class acquired by the trustees at a later time.
(7)For the purposes of this section shares which are subject to provision for forfeiture are treated as acquired by the trustees if and when the forfeiture occurs.
(8)In relation to shares acquired by the trustees before 11th May 2001 this section has effect with the substitution—
(a)in subsection (3), of “Subject to subsection (4)” for the words before “the period applicable”, and
(b)in subsection (4)(b), of “the shares in question” for “any of the shares in that company”.
(1)Section 686B and this section form part of the SIP code (see section 488 of ITEPA 2003 (approved share incentive plans)).
(2)Accordingly, expressions used in section 686B or this section and contained in the index at the end of Schedule 2 to that Act (approved share incentive plans) have the meaning indicated by that index.
(3)References in section 686B to shares being awarded to a participant include references to the shares being acquired on behalf of the participant as dividend shares.
(4)In section 686B, “readily convertible assets” has the meaning given by sections 701 and 702 of ITEPA 2003, but this is subject to subsection (5).
(5)In determining for the purposes of section 686B whether shares are readily convertible assets, any market for the shares that—
(a)is created by virtue of the trustees acquiring shares for the purposes of the plan, and
(b)exists solely for the purposes of the plan,
shall be disregarded.”