Finance Act 1976

90 Dispositions on trust for benefit of employees

(1) Subject to subsection (3) below, a disposition of property made to trustees by a close company whereby the property is to be held on trusts of the description specified in paragraph 17(1) of Schedule 5 to the Finance Act 1975 is not a transfer of value if the persons for whose benefit the trusts permit the property to be applied include all or most of either—

(a) the persons employed by or holding office with the company; or

(b) the persons employed by or holding office with the company or any one or more subsidiaries of the company.

(2) Subject to subsection (3) below, a disposition of property made to trustees by an individual beneficially entitled to shares in a company whereby the property is to be held on trusts of the said description is not a transfer of value if—

(a) the property consists of all the shares and securities of the company to which he is beneficially entitled; and

(b) immediately after the disposition there are no shares or securities of the company to which his spouse is beneficially entitled; and

(c) as a result of the disposition and of any other dispositions made on the same occasion, the trustees—

(i) hold all or substantially all of the ordinary shares in the company, and

(ii) have powers of voting on all questions affecting the company as a whole which if exercised would yield a majority of the votes capable of being exercised thereon; and

(d) the persons for whose benefit the trusts permit the property to be applied include all or most of the persons employed by or holding office with the company.

(3) Subject to subsection (4) below, subsections (1) and (2) above do not apply if the trusts permit any of the property to be applied at any time (whether during any such period as is referred to in the said paragraph 17(1) or later) for the benefit of—

(a) a person who is a participator in the company making the disposition or, as the case may be, the company whose shares are disposed of ; or

(b) any other person who is a participator in any close company that has made a disposition whereby property became comprised in the same settlement, being a disposition which but for this section would have been a transfer of value ; or

(c) any other person who has been a participator in any such company as is mentioned in paragraph (a) or (b) above at any time after, or during the ten years before, the disposition made by that company or, as the case may be, the disposition of its shares ; or

(d) any person who is connected with any person within paragraph (a), (b) or (c) above.

(4) The participators in a company who are referred to in subsection (3) above do not include any participator who on a winding-up of the company would not be entitled to 5 per cent. or more of its assets ; and in determining whether the trusts permit property to be applied as mentioned in that subsection, no account shall be taken of any power to make a payment which is the income of any person for any of the purposes of income tax, or would be the income for any of those purposes of a person not resident in the United Kingdom if he were so resident.

(5) In this section—

• " close company " and " participator " have the same meanings as in section 39 of the [1975 c. 7.] Finance Act 1975 ;

• " ordinary shares " means shares which carry either—

  (a)

  a right to dividends not restricted to dividends at a fixed rate, or

  (b)

  a right to conversion into shares carrying such a right as is mentioned in paragraph (a) above;

• " subsidiary " has the same meaning as in the [1948 c. 38.] Companies Act 1948 ; and references in subsections (3) and (4) above to a participator in a company shall, in the case of a company which is not a close company, be construed as references to a person who would be a participator in the company if it were a close company.

(6) This section applies to dispositions made after 6th April 1976.