SCHEDULE 8
Part XI Capital gains tax
Introduction
97
The provisions of this Part apply for capital gains tax purposes in relation to an approved employee share ownership plan.
Gains accruing to trustees
98
(1)
Any gain accruing to the trustees is not a chargeable gain if the shares—
(a)
are shares in relation to which the requirements of Part VIII are met, and
(b)
are awarded to employees, or acquired on their behalf as dividend shares, in accordance with the plan within the relevant period.
(2)
If the shares are readily convertible assets at the time they are acquired by the trustees, the relevant period is the period of two years beginning with the date on which the shares are acquired by the trustees.
(3)
If at the time of their acquisition by the trustees the shares are not readily convertible assets, the relevant period is—
(a)
the period of five years beginning with the date on which the shares were acquired, or
(b)
if within that period the shares in question become readily convertible assets, the period of two years beginning with the date on which they did so,
whichever ends first.
(4)
For the purposes of determining whether shares are awarded to employees within the relevant period, shares acquired by the trustees at an earlier time are taken to be awarded to employees before shares of the same class acquired by the trustees at a later time.
This is subject to paragraph 76(1) (treatment of shares acquired from an employee share ownership trust).
Participant absolutely entitled as against trustees
99
(1)
A participant is treated for capital gains tax purposes as absolutely entitled as against the trustees to any shares awarded to him under the plan.
(2)
This applies notwithstanding anything in the plan or the trust instrument.
Disposal of rights under rights issue
104
(1)
Any gain accruing on the disposal of rights under paragraph 72 (power of trustees to raise funds to subscribe for rights issue) is not a chargeable gain.
(2)
Sub-paragraph (1) does not apply to a disposal of rights unless similar rights are conferred in respect of all ordinary shares in the company.