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 6F4... share incentive plans
Word in Pt. 7 Ch. 6 title omitted (6.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 8 paras. 2, 89 (with Sch. 8 paras. 90-96)
PAYE
509Modification of section 696 where charge on shares ceasing to be subject to plan
1
Where—
a
as a result of shares ceasing to be subject to F5a Schedule 2SIP, there is an amount that counts as employment income of a participant by virtue of the SIP code, and
b
the shares are readily convertible assets,
section 696 (readily convertible assets) applies as follows.
2
Section 696 applies as if the participant (“P”) were being provided with PAYE income in the form of those shares—
a
at the time when the shares cease to be subject to the plan, and
b
in respect of the relevant employment in which P is employed at that time (or, if P is not then employed in relevant employment, the relevant employment in which P was last employed before that time).
3
In addition, subsection (2) of section 696 applies as if the reference in that subsection to the amount of income likely to be PAYE income in respect of the provision of the asset were a reference to the amount which is likely to count as employment income by virtue of the SIP code as a result of the shares ceasing to be subject to the plan.
4
In this section “readily convertible asset” has the same meaning as in section 696 (see sections 701 and 702), but this is subject to F2subsections (5) and (6).
5
In determining for the purposes of this section (and of section 696 in its application in accordance with this section) whether the shares are readily convertible assets, any market for the shares which—
a
is created by virtue of the trustees acquiring shares for the purposes of the plan, and
b
exists solely for the purposes of the plan,
is to be disregarded.
F36
In determining for the purposes of this section (and of section 696 in its application in accordance with this section) whether the shares are readily convertible assets, section 702 has effect with the omission of subsections (5A) to (5D).
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)