SCHEDULE 8
Part X Income tax
PAYE: shares ceasing to be subject to the plan
95
(1)
Sub-paragraphs (2) to (5) apply where as a result of any shares (“the relevant shares”) ceasing to be subject to the plan—
(a)
a participant is chargeable to income tax under Schedule E in accordance with this Part of this Schedule, and
(b)
an obligation to make a PAYE deduction arises in respect of that charge.
(2)
The trustees must pay to the employer company a sum which is sufficient to enable the employer company to discharge that obligation.
This is subject to sub-paragraphs (3) and (7).
(3)
Sub-paragraph (2) only applies where, or to the extent that, the plan does not require the participant to pay the employer company a sum that is sufficient to discharge the obligation mentioned in sub-paragraph (1)(b).
(4)
Section 203J(1) of the Taxes Act 1988 (sections 203B to 203I: accounting for tax) shall have effect as if it required the deduction of income tax to be made from any sum or sums received by the employer—
(a)
from the trustees under sub-paragraph (2), or
(b)
from the participant in accordance with the plan, as mentioned in sub-paragraph (3).
(5)
After making the necessary PAYE deduction from the sum or sums received as mentioned in sub-paragraph (4), the employer company shall pay any remaining amounts to the participant.
(6)
For the purposes of this paragraph “the employer company” means F1the company which employs the participant in relevant employment at the time when the shares cease to be subject to the plan (or, if the participant is not employed in relevant employment at that time, the company which last employed him in relevant employment before that time), provided that that company is one to whom the PAYE regulations (within the meaning of section 203L(3) of the Taxes Act 1988) at that time apply.
(7)
Where, as a result of any shares ceasing to be subject to the plan, a participant is chargeable to income tax under Schedule E in accordance with this Part and either—
(a)
there is no company which falls within sub-paragraph (6), or
(b)
the Inland Revenue are of the opinion that it is impracticable for the company which falls within that sub-paragraph to make a PAYE deduction and accordingly direct that this sub-paragraph shall apply,
then sub-paragraph (2) shall not apply and the trustees shall make a PAYE deduction in respect of an amount equal to that on which income tax is payable as if the participant were a former employee of the trustees.
(8)
In a case where sub-paragraph (7) applies, section 203C of the Taxes Act 1988 (PAYE: employee of non-UK employer) does not apply.
(9)
Where—
(a)
a participant disposes of his beneficial interest in any of his plan shares to the trustees, and
(b)
the trustees are deemed by virtue of paragraph 74 to have disposed of the shares in question,
this paragraph shall apply as if the consideration payable by the trustees to the participant on the disposal had been received by the trustees as the proceeds of disposal of plan shares.
(10)
For the purposes of this paragraph “PAYE deduction” means a deduction required by regulations under section 203 of the Taxes Act 1988.