C1Part 7F1Employment income: income and exemptions relating to securities
Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)
Chapter 6Approved share incentive plans
Charges connected with holding of shares
502Meaning of “capital receipt” in section 501
1
This section applies for determining whether any money or money’s worth is a “capital receipt” for the purposes of section 501.
2
The general rule is that any money or money’s worth is a “capital receipt” for the purposes of section 501.
3
The general rule is subject to the following exceptions.
4
Money or money’s worth is not a capital receipt for the purposes of section 501 to the extent that—
a
it constitutes income in the hands of the recipient for the purposes of income tax or would do so but for sections 489 to 498 (SIPs: tax advantages) F2or section 770 of ITTOIA 2005 (exemption for amounts applied by SIP trustees acquiring dividend shares or retained for reinvestment),
b
it consists of the proceeds of disposal of the plan shares mentioned in section 501, or
c
it consists of new shares within the meaning of paragraph 87 of Schedule 2 (company reconstructions).
5
If, as a result of a direction given by or on behalf of the participant for the purposes of paragraph 77 of Schedule 2 (power of trustees to raise funds to subscribe for rights issues), the trustees—
a
dispose of some of the rights under a rights issue, and
b
use the proceeds of that disposal to exercise other such rights,
the money or money’s worth constituting the proceeds of that disposal is not a capital receipt for the purposes of section 501.
Pt. 7 heading 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)