Income Tax (Earnings and Pensions) Act 2003

[F1 420 Meaning of “securities” etc U.K.

(1) Subject to subsections (5) and (6), for the purposes of this Chapter and Chapters 2 to 5 the following are “securities”—

(a) shares in any body corporate (wherever incorporated) or in any unincorporated body constituted under the law of a country or territory outside the United Kingdom,

[F2 (aa) rights under contracts of insurance other than excluded contracts of insurance,]

(b) debentures, debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness, [F3 (other than contracts of insurance)]

(c) warrants and other instruments entitling their holders to subscribe for securities (whether or not in existence or identifiable),

(d) certificates and other instruments conferring rights in respect of securities held by persons other than the persons on whom the rights are conferred and the transfer of which may be effected without the consent of those persons,

(e) units in a collective investment scheme,

(f) [F4 options and] futures, F5 ...

(g) rights under contracts for differences or contracts similar to contracts for differences [F6 (other than contracts of insurance)][F7 , and

(h) arrangements falling within section 48A of [F8 FA] 2005 (alternative finance arrangements: alternative finance investment bond) [F9 or section 507 of CTA 2009 (investment bond arrangements)].]

[F10 (1A) For the purposes of subsection (1)(aa) a contract of insurance is an excluded contract of insurance if it is—

(a) a contract for an annuity which is (or will be) pension income (see Part 9),

(b) a contract of long-term insurance, other than an annuity contract, which does not have a surrender value and is not capable of acquiring one (whether on conversion or in any other circumstances), or

(c) a contract of general insurance other than one which falls, in accordance with generally accepted accounting practice, to be accounted for as a financial asset or liability.

(1B) In this section—

• “contract of insurance”,

• “contract of long-term insurance”, and

• “contract of general insurance”,

have the same meaning as in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.]

(2) In subsection (1)(e) “collective investment scheme” means arrangements—

(a) which are made with respect to property of any description, including money, and

(b) the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.

(3) In subsection (1)(f) “futures” means rights under a contract for the sale of a commodity or other property under which delivery is to be made at a future date at a price agreed when the contract is made; and for this purpose a price is to be taken to be agreed when the contract is made—

(a) if it is left to be determined by reference to the price at which a contract is to be entered into on a market or exchange or could be entered into at a time and place specified in the contract, and

(b) in a case where the contract is expressed to be by reference to a standard lot and quality, even if provision is made for a variation in the price to take account of any variation in quantity or quality on delivery.

(4) For the purposes of subsection (1)(g) a contract similar to a contract for differences is a contract—

(a) which is not a contract for differences, but

(b) the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in the value or price of property or an index or other factor designated in the contract.

(5) The following are not “securities” for the purposes of this Chapter or Chapters 2 to 5—

(a) cheques and other bills of exchange, bankers' drafts and letters of credit (other than bills of exchange accepted by a banker),

(b) money and statements showing balances on a current, deposit or savings account,

(c) leases and other dispositions of property and heritable securities, [F11 and]

F12 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) [F13 securities] options.

(6) The Treasury may by order amend subsections (1) to (5).

(7) An order under subsection (6) may include any appropriate consequential provision (including provision amending any enactment).

(8) In this Chapter and Chapters 2 to 5—

• “interest”, in relation to securities (or shares), means an interest in them less than full beneficial ownership and includes an interest in proceeds of their sale, but does not include a right to acquire them,

• “securities option” means a right to acquire securities [F14 other than a right to acquire securities which is acquired pursuant to a right or opportunity made available under arrangements the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions], and

• “shares” includes stock.]

Textual Amendments

F1 Pt. 7 Ch. 1 substituted (with effect in accordance with Sch. 22 para. 2(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 2(1)

F2 S. 420(1)(aa) inserted (with effect in accordance with Sch. 2 para. 2(8) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 2(2)

F3 Words in s. 420(1)(b) inserted (with effect in accordance with Sch. 2 para. 2(8) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 2(3)

F4 Words in s. 420(1)(f) inserted (with effect in accordance with s. 92(5) of the amending Act) by Finance Act 2006 (c. 25), s. 92(2)

F5 Word in s. 420(1)(f) omitted (14.8.2007) by virtue of The Employment Income (Meaning of Securities) Order 2007 (S.I. 2007/2130), arts. 1, 2(a)

F6 Words in s. 420(1)(g) inserted (with effect in accordance with Sch. 2 para. 2(8) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 2(4)

F7 S. 420(1)(h) and word inserted (14.8.2007) by The Employment Income (Meaning of Securities) Order 2007 (S.I. 2007/2130), arts. 1, 2(b)

F8 Word in s. 420(1)(h) substituted (21.7.2009) by Finance Act 2009 (c. 10), s. 126(5)(b)

F9 Words in s. 420(1)(h) inserted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 553 (with Sch. 2 Pts. 1, 2)

F10 S. 420(1A)(1B) inserted (with effect in accordance with Sch. 2 para. 2(8) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 2(5)

F11 Word in s. 420(5)(c) inserted (with effect in accordance with Sch. 2 para. 2(8) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 2(6)(a)

F12 S. 420(5)(d) repealed (with effect in accordance with Sch. 2 para. 2(8) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 2(6)(b), Sch. 11 Pt. 2(1)

F13 Word in s. 420(5)(e) inserted (with effect in accordance with s. 92(5) of the amending Act) by Finance Act 2006 (c. 25), s. 92(3)

F14 Words in s. 420(8) inserted (with effect in accordance with s. 92(5) of the amending Act) by Finance Act 2006 (c. 25), s. 92(4)