Modifications etc. (not altering text)
C1Sch. 5 applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the applying Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 228(7), 235(8), 289 (with ss. 60, 101(1), 171, 201(3))
4(1)The trust deed must contain provision as to the beneficiaries under thetrust, in accordance with the following rules.U.K.
(2)The trust deed must provide that a person is a beneficiary at a particulartime (the relevant time) if—
(a)he is at the relevant time an employee or director of a company which atthat time falls within the founding company’s group,
(b)at each given time in a qualifying period he was an employee or directorof a company falling within the founding company’s group at that given time,and
(c)[F1in the case of a director, at that given time he worked as a] director of the companyconcerned at the rate of at least 20 hours a week (ignoring such matters asholidays and sickness).
[F2(2A)The trust deed may provide that a person is a beneficiary at a given time if at that time he is eligible to participate in [F3an SAYE option scheme]—
(a)which was established by a company within the founding company’s group, and
(b)which is approved under [F4Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003].
F2(2B)Where a trust deed contains a rule conforming with sub-paragraph (2A) above it must provide that the only powers and duties which the trustees may exercise in relation to persons who are beneficiaries by virtue only of that rule are those which may be exercised in accordance with the provisions of a scheme such as is mentioned in that sub-paragraph.]
(3)The trust deed may provide that a person is a beneficiary at a particulartime (the relevant time) if—
(a)he has at each given time in a qualifying period been an employee ordirector of a company falling within the founding company’s group at thatgiven time,
(b)he has ceased to be an employee or director of the company or the companyhas ceased to fall within that group, and
(c)at the relevant time a period of not more than eighteen months has elapsedsince he so ceased or the company so ceased (as the case may be).
(4)The trust deed may provide for a person to be a beneficiary if the personis a charity and the circumstances are such that—
(a)there is no person who is a beneficiary within any rule which is includedin the deed and conforms with sub-paragraph (2) [F5, (2A)] or (3) above, and
(b)the trust is in consequence being wound up.
(5)For the purposes of sub-paragraph (2) above a qualifying period is aperiod—
(a)whose length is F6. . . not more than five years,
(b)whose length is specified in the trust deed, and
(c)which ends with the relevant time (within the meaning of thatsub-paragraph).
(6)For the purposes of sub-paragraph (3) above a qualifying period is aperiod—
(a)whose length is equal to that of the period specified in the trust deedfor the purposes of a rule which conforms with sub-paragraph (2) above, and
(b)which ends when the person or company (as the case may be) ceased asmentioned in sub-paragraph (3)(b) above.
(7)The trust deed must not provide for a person to be a beneficiary unlesshe falls within any rule which is included in the deed and conforms withsub-paragraph (2) [F7, (2A)], (3) or (4) above.
(8)The trust deed must provide that, notwithstanding any other rule which isincluded in it, a person cannot be a beneficiary at a particular time (therelevant time) [F8by virtue of a rule which conforms with sub-paragraph (2), (3) or (4) above] if—
(a)at that time he has a material interest in the founding company, or
(b)at any time in the period of one year preceding the relevant time he hashad a material interest in that company.
(9)For the purposes of this paragraph a company falls within the foundingcompany’s group at a particular time if—
(a)it is at that time resident in the United Kingdom, and
(b)it is the founding company or it is at that time controlled by thefounding company.
(10)For the purposes of this paragraph a charity is a body of personsestablished for charitable purposes only.
Textual Amendments
F1Words in Sch. 5 para. 4(2)(c) substituted (1.5.1995 with effect as mentioned in s. 137(9) of the amending Act) by 1995 c. 4, s. 137(5)
F2Sch. 5 para. 4(2A)(2B) inserted (29.4.1996 with effect in relation to trusts established on or after 29.4.1996) by 1996 c. 8, s. 120(1)(12)
F3Words in Sch. 5 para. 4(2A) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 163(2)(a) (with Sch. 7)
F4Words in Sch. 5 para. 4(2A)(b) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 163(2)(b) (with Sch. 7)
F5Words in Sch. 5 para. 4(4) inserted (29.4.1996 with effect in relation to trusts established on or after 29.4.1996) by 1996 c. 8, s. 120(5)(12)
F6Words in Sch. 5 para. 4(5)(a) repealed (29.4.1996 with effect in relation to trusts established on or after 29.4.1996) by 1996 c. 8, s. 119(1)(2), 205, Sch. 41 Pt. V(5), note 4
F7Words in Sch. 5 para. 4(7) inserted (29.4.1996 with effect in relation to trusts established on or after 29.4.1996) by 1996 c. 8, s. 120(6)(12)
F8Words in Sch. 5 para. 4(8) inserted (29.4.1996 with effect in relation to trusts established on or after 29.4.1996) by 1996 c. 8, s. 120(7)(12)
Modifications etc. (not altering text)
C2 See Finance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts