Part 7U.K.[F1Employment income: income and exemptions relating to securities]

Textual Amendments

F1Pt. 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)

Modifications etc. (not altering text)

C1Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)

Chapter 6U.K.Approved share incentive plans

Charges connected with holding of sharesU.K.

502Meaning of “capital receipt” in section 501U.K.

(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.

Textual Amendments