SCHEDULES
SCHEDULE 2Approved share incentive plans
Part 6Partnership shares
Deductions from salary
45
1
The plan must provide for a partnership share agreement to be given effect by deductions from the employee’s salary.
2
Amounts so deducted are referred to in the SIP code as “partnership share money”.
3
The partnership share agreement must specify—
a
what amounts are to be deducted, and
b
at what intervals;
but this does not prevent the employee and the company agreeing to vary those amounts or intervals.
4
For the purposes of sub-paragraph (3)(a) the agreement may specify a percentage of the employee’s salary.
5
The plan must require the employer company to calculate the amounts and intervals having regard to paragraph 46 (maximum amount of deductions from salary).
6
In sub-paragraph (5) “the employer company” means the company by reference to which the employee meets the employment requirement in relation to the plan.
Maximum amount of deductions
46
1
The amount of partnership share money deducted from an employee’s salary must not exceed F2£1,500 in any tax year.
2
The amount of partnership share money deducted from an employee’s salary F3for any tax year must not exceed 10% of the employee’s salary for the tax year.
3
The plan may authorise the company to specify lower limits than those specified in sub-paragraphs (1) and (2).
4
If it does so, different limits may be specified in relation to different awards of shares.
F14A
A limit lower than that specified in sub-paragraph (2) may be framed—
a
as a proposition substituting a percentage lower than that so specified, or
b
as a proposition that a particular description of earnings is not to be regarded as forming part of an employee’s salary for the purposes of that sub-paragraph.
5
Any amount deducted in excess of that allowed by sub-paragraph (1) or (2), or any lower limit in the plan, must be paid over to the employee as soon as practicable.
Minimum amount of deductions
47
1
The plan may provide that the amount to be deducted under a partnership share agreement F4on any occasion must not be less than a minimum amount specified in the plan.
2
The specified minimum amount must not be greater than £10.
F53
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Notice of possible effect of deductions on benefit entitlement
48
1
The plan must provide that the company may not enter into a partnership share agreement with an employee unless the agreement contains a notice under this paragraph.
2
A notice under this paragraph is a notice in a prescribed form containing prescribed information as to the possible effect of deductions on an employee’s entitlement to social security benefits, statutory sick pay and statutory maternity pay.
3
In this paragraph “prescribed” means prescribed by regulations made by F6the Commissioners for Her Majesty’s Revenue and Customs .
Application of money deducted where no accumulation periods
50
1
If the plan does not provide for an accumulation period, it must provide for partnership share money to be applied by the trustees in acquiring partnership shares on behalf of the employee on the acquisition date.
2
The number of shares awarded to each employee must be determined in accordance with the market value of the shares on the acquisition date.
3
Sub-paragraphs (1) and (2) are subject to paragraph 53 (restriction on number of shares awarded).
4
In those sub-paragraphs “the acquisition date” means the date set by the trustees in relation to the award of partnership shares, which must be not later than 30 days after the last date on which the partnership share money to be applied in acquiring the shares was deducted.
5
Any surplus partnership share money remaining after the acquisition of shares by the trustees—
a
may with the agreement of the employee be carried forward and added to the amount of the next deduction, and
b
in any other case must be paid over to the employee as soon as practicable.
Accumulation periods
51
1
The plan may provide for accumulation periods not exceeding 12 months.
2
If the plan does so, the following provisions apply.
3
The partnership share agreements—
a
must specify when each accumulation period begins and ends;
b
may specify that an accumulation period comes to an end on the occurrence of a specified event.
4
However—
a
the beginning of the first accumulation period must not be later than the date on which the first deduction of partnership share money is made; and
b
the accumulation period which applies in relation to each award of partnership shares must be the same for all individuals entering into the partnership share agreements.
5
The plan may also provide that if—
a
during an accumulation period, a transaction occurs in relation to any of the shares (“the original holding”) to be acquired under a partnership share agreement which results in a new holding of shares being equated with the original holding for the purposes of capital gains tax, and
b
the employee consents,
the partnership share agreement is to have effect after the time of the transaction as if it were an agreement for the purchase of the shares comprised in the new holding.
Application of money deducted in accumulation period
52
1
This paragraph applies if the plan provides for one or more accumulation periods.
2
The plan must provide for the partnership share money deducted in each accumulation period under a partnership share agreement to be applied by the trustees in acquiring partnership shares on behalf of the employee on the acquisition date.
3
The number of shares awarded to each employee must be determined in accordance with the lower of—
a
the market value of the shares at the beginning of the accumulation period, and
b
the market value of the shares on the acquisition date.
4
Sub-paragraphs (2) and (3) are subject to sub-paragraphs (7) and (8) and to paragraph 53 (restriction on number of shares awarded).
5
In sub-paragraphs (2) and (3) “the acquisition date” means the date set by the trustees in relation to the award of partnership shares, which must be not later than 30 days after the end of the accumulation period which applies in relation to the award.
6
Any surplus partnership share money remaining after the acquisition of shares by the trustees—
a
may with the agreement of the employee be carried forward to the next accumulation period, and
b
in any other case must be paid over to the employee as soon as practicable.
7
The plan must provide that where the employee ceases to be in relevant employment during an accumulation period, any partnership share money deducted in the period is to be paid over to the individual as soon as practicable.
8
The partnership share agreement may provide that, where an accumulation period comes to an end on the occurrence of a specified event, the partnership share money deducted in that period must be paid over to the individual as soon as practicable instead of being applied in acquiring shares.
Stopping and re-starting deductions
54
1
The plan must provide that an employee may at any time give notice to the company to stop deductions under a partnership share agreement.
2
The plan must provide that, unless a later date is specified in the notice, the company must, on receiving a notice within sub-paragraph (1), ensure within 30 days after receipt of the notice that no further deductions are made by it under the partnership share agreement.
3
The plan must also provide that an employee who has stopped deductions—
a
may subsequently give notice to the company to re-start deductions under the agreement, but
b
may not make up deductions that have been missed.
4
If the plan makes provision for one or more accumulation periods, it may prevent an employee re-starting deductions more than once in any accumulation period.
5
The plan must provide that, unless a later date is specified in the notice, the company must, on receiving a notice within sub-paragraph (3), re-start deductions under the partnership share agreement not later than the re-start date.
6
“The re-start date” means the date of the first deduction due under the partnership share agreement more than 30 days after receipt of the notice under sub-paragraph (3).
7
In this paragraph “notice” means notice in writing.