Textual Amendments
F1Sch. 5B inserted (with effect in accordance with Sch. 13 para. 4(4) of the amending Act) by Finance Act 1995 (c. 4), Sch. 13 para. 4(3)
1(1)This Schedule applies where—U.K.
(a)there would (apart from paragraph 2(2)(a) below) be a chargeable gain (“the original gain”) accruing to an individual (“the investor”) at any time (“the accrual time”) on or after 29th November 1994;
(b)the gain is one accruing either on the disposal by the investor of any asset or in accordance with [F2section 164F or 164FA,] [F3section 169N,] paragraphs 4 and 5 below or paragraphs 4 and 5 of Schedule 5C;
(c)the investor makes a qualifying investment; and
(d)the investor is resident or ordinarily resident in the United Kingdom at the accrual time and the time when he makes the qualifying investment and is not, in relation to the qualifying investment, a person to whom sub-paragraph (4) below applies.
[F4(2)The investor makes a qualifying investment for the purposes of this Schedule if—
(a)eligible shares in a company for which he has subscribed F5... are issued to him at a qualifying time and, where that time is before the accrual time, the shares are still held by the investor at the accrual time,
[F6(aza)he subscribed for the shares (other than any of them which are bonus shares) wholly in cash,]
(b)the company is a qualifying company in relation to the shares,
(c)at the time when they are issued the shares [F7(other than any of them which are bonus shares) are fully paid up],
(d)the shares are subscribed for, and issued, for bona fide commercial purposes and not as part of arrangements the main purpose or one of the main purposes of which is the avoidance of tax,
[F8(da)the total amount of relevant investments made in the company in the year ending with the date the shares are issued does not exceed £2 million,]
(e)the requirements of section 289(1A) of the Taxes Act [F9(read with section 289(1B) to (1E) of that Act)][F10, or the requirements of section 183 of ITA 2007,] are satisfied in relation to the company,
(f)[F11the shares (other than any of them which are bonus shares)] are issued in order to raise money for the purpose of a qualifying business activity, and
[F12[F13(g)at least 80 per cent. of the money raised by the issue of—
(i)the shares, and
(ii)all other eligible shares (if any) in the company of the same class which are issued on the same day,
is employed wholly for the purpose of that activity not later than the time mentioned in section 289(3) of the Taxes Act [F14or section 175(3) of ITA 2007], and]
(h)all of the money so raised is employed wholly for that purpose not later than 12 months after that time,]
and for the purposes of this Schedule, the [F15conditions in paragraphs (g) and (h) above do] not fail to be satisfied by reason only of the fact that an amount of money which is not significant is employed for another purpose.
(3)In sub-paragraph (2) above “a qualifying time”, in relation to any shares subscribed for by the investor, means—
(a)any time in the period beginning one year before and ending three years after the accrual time, or
(b)any such time before the beginning of that period or after it ends as the Board may by notice allow.]
(4)This sub-paragraph applies to the investor in relation to a qualifying investment if—
(a)though resident or ordinarily resident in the United Kingdom at the time when he makes the investment, he is regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom, and
(b)were section 150A to be disregarded, the arrangements would have the effect that he would not be liable in the United Kingdom to tax on a gain arising on a disposal, immediately after their acquisition, of the shares acquired in making that investment.
[F16(5)Shares are not fully paid up for the purposes of sub-paragraph (2)(c) above if there is any undertaking to pay cash to any person at a future date in respect of the acquisition of the shares.]
[F17(6)Section 173A(3) and (4) of ITA 2007 (meaning of “relevant investment”) apply for the purposes of sub-paragraph (2)(da).
(7)In sub-paragraph (2)(da), the reference to relevant investments made in the company includes relevant investments made in a company that is, or has at any time in the year mentioned there been, a subsidiary of the company (whether or not it was such a subsidiary when the investment was made).]]
Textual Amendments
F2Words in Sch. 5B para. 1(1)(b) inserted (with effect in accordance with s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 27(1)
F3Words in Sch. 5B para. 1(1)(b) inserted (with effect in accordance with Sch. 3 para. 5 of the amending Act) by Finance Act 2008 (c. 9), Sch. 3 para. 4
F4Sch. 5B para. 1(2)(3) substituted (with effect in accordance with s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 27(2)
F5Words in Sch. 5B para. 1(2)(a) repealed (with effect in accordance with Sch. 18 para. 21 of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 13(1)(a), Sch. 42 Pt. 2(13)
F6Sch. 5B para. 1(2)(aza) inserted (with effect in accordance with Sch. 18 para. 21 of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 13(1)(b)
F7Words in Sch. 5B para. 1(2)(c) substituted (with effect in accordance with Sch. 18 para. 21 of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 13(1)(c)
F8Sch. 5B para. 1(2)(da) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 7(2)(a)
F9Words in Sch. 5B para. 1(2)(e) inserted (with effect in accordance with Sch. 18 para. 21 of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 13(1)(d)
F10Words in Sch. 5B para. 1(2)(e) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 345(2)(a) (with Sch. 2)
F11Words in Sch. 5B para. 1(2)(f) substituted (with effect in accordance with Sch. 18 para. 21 of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 13(1)(e)
F12Sch. 5B para. 1(2)(g)(h) substituted for Sch. 5B para. 1(2)(g) (11.5.2001) by Finance Act 2001 (c. 9), Sch. 15 para. 26(a) (with Sch. 3)
F13Sch. 5B para. 1(2)(g) substituted (with effect in accordance with Sch. 18 para. 21 of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 13(1)(f)
F14Words in Sch. 5B para. 1(2)(g) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 345(2)(b) (with Sch. 2)
F15Words in Sch. 5B para. 1(2) substituted (11.5.2001) by Finance Act 2001 (c. 9), Sch. 15 para. 26(b) (with Sch. 3)
F16Sch. 5B para. 1(5) inserted (with effect in accordance with Sch. 18 para. 21 of the amending Act) by Finance Act 2004 (c. 12), Sch. 18 para. 13(2)
F17Sch. 5B para. 1(6)(7) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 7(2)(b)