88(1)This paragraph applies to income of the trustees consisting of dividends or other distributions in respect of shares held by them in relation to which the requirements of Part VIII are met.
(2)Income to which this paragraph applies is income to which section 686 of the Taxes Act 1988 (accumulation and discretionary trusts: special rates of tax) applies only if and when—
(a)the period applicable to the shares under the following provisions 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)[F1If 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.
(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 within which the shares must be awarded is—
(a)five years beginning with the date on which the shares were acquired by the trustees, or
(b)if within that period the shares in question[F2any of the shares in that company]become readily convertible assets, two years beginning with the date on which they did so,
whichever ends first.
(5)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.
(6)For the purposes of this paragraph shares which are subject to provision for forfeiture are treated as acquired by the trustees if and when the forfeiture occurs.
(7)In this paragraph references to the shares being awarded include references to shares being acquired on behalf of a participant as dividend shares.
Textual Amendments
F1Words in Sch. 8 para. 88(3) substituted (11.5.2001 with effect as mentioned in Sch. 13 para. 6(2)(3) of the amending Act) by 2001 c. 9, s. 61, Sch. 13 para. 6(1)(a)(2)(3)
F2Words in Sch. 8 para. 88(4) substituted (11.5.2001 with effect as mentioned in Sch. 13 para. 6(2)(3) of the amending Act) by 2001 c. 9, S. 61, Sch. 13 para. 6(1)(b)(2)(3)