Search Legislation

Finance Act 2003

Changes over time for: Part 3

 Help about opening options

Version Superseded: 28/09/2004

Status:

Point in time view as at 27/09/2003.

Changes to legislation:

Finance Act 2003, Part 3 is up to date with all changes known to be in force on or before 25 December 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

Close

Changes to Legislation

Changes and effects yet to be applied by the editorial team are only applicable when viewing the latest version or prospective version of legislation. They are therefore not accessible when viewing legislation as at a specific point in time. To view the ‘Changes to Legislation’ information for this provision return to the latest version view using the options provided in the ‘What Version’ box above.

Part 3U.K.Grant of option

IntroductionU.K.

11(1)The provisions of this Part of this Schedule apply in the case of the grant of an option to acquire shares.U.K.

[F1(2)Where the shares acquired pursuant to the option are restricted shares, the provisions of this Part have effect subject to the provisions of Part 4 of this Schedule.

(3)Where the shares acquired pursuant to the option are convertible shares, the provisions of this Part have effect subject to the provisions of Part 4A of this Schedule.]

Textual Amendments

F1Sch. 23 para. 11(2)(3) substituted for Sch. 23 para. 11(2) (with effect in accordance with Sch. 22 paras. 68(2), 69(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 62; S.I. 2003/1997, art. 2

The company whose shares are acquiredU.K.

12U.K.The company whose shares are acquired [F2pursuant to] the option must be—

(a)the employing company; or

(b)a company that, at the time the option is granted, is a parent company in relation to the employing company; or

(c)a company that, at that time, is a member of a consortium that owns the employing company or a company within paragraph (b); or

(d)where, at that time, the employing company or a company within paragraph (b) is a member of a consortium that owns another company (C), a company that, at that time—

(i)is a member of the consortium or a parent company in relation to a member of the consortium, and

(ii)is also a member of the same commercial association of companies as C; or

(e)a qualifying successor company (see paragraph 13).

Textual Amendments

F2Words in Sch. 23 para. 12 substituted (with effect in accordance with Sch. 22 paras. 68(2), 69(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 63; S.I. 2003/1997, art. 2

Takeover of company whose shares are subject of optionU.K.

13(1)This paragraph applies where—U.K.

(a)there is a takeover of a company whose shares are the subject of a qualifying option,

(b)the holder of the option, by agreement with the acquiring company, releases his rights under that option (“the old option”) in consideration of the grant to him of another option (“the new option”), and

(c)the new option relates to shares in a qualifying company.

(2)Where those conditions are met—

(a)the company whose shares are the subject of the new option is a qualifying successor company for the purposes of paragraph 12 (requirement as to company whose shares are acquired),

(b)shares acquired [F3pursuant to] the new option are treated for the purposes of this Schedule as if they had been acquired [F3pursuant to] the old option, and

[F4(c)in determining the amount of relief—

(i)any consideration given in respect of the grant of the new option is treated as if it had been given in respect of the grant of the old option, and

(ii)any consideration given in respect of the acquisition of shares pursuant to the new option is treated as if it had been given in respect of the acquisition of shares pursuant to the old option.]

(3)For the purposes of this paragraph—

(a)there is a takeover of a company where another company (“the acquiring company”) acquires control of it; and

(b)an option is a “qualifying option” if the requirements of paragraph 12 would be met in relation to [F5the shares acquired pursuant to it].

(4)The following are qualifying companies for the purposes of this paragraph—

(a)the acquiring company;

(b)a company that, at the time of the takeover, is a parent company in relation to the acquiring company;

(c)a company that, at that time, is a member of a consortium that owns the acquiring company or a company within paragraph (b);

(d)where, at that time, the acquiring company or a company within paragraph (b) is a member of a consortium that owns another company (C), a company that, at that time—

(i)is a member of the consortium or a parent company in relation to a member of the consortium, and

(ii)is also a member of the same commercial association of companies as C.

Textual Amendments

F3Words in Sch. 23 para. 13(2)(b) substituted (1.9.2003) by Finance Act 2003 (c. 14), Sch. 22 para. 64(2)(5); S.I. 2003/1997, art. 2

F4Sch. 23 para. 13(2)(c) substituted (1.9.2003) by Finance Act 2003 (c. 14), Sch. 22 para. 64(3)(5); S.I. 2003/1997, art. 2

F5Words in Sch. 23 para. 13(3)(b) substituted (1.9.2003) by Finance Act 2003 (c. 14), Sch. 22 para. 64(4)(5); S.I. 2003/1997, art. 2

[F6Income tax position of the employeeU.K.

14(1)It must be the case that the acquisition of shares pursuant to the option—U.K.

(a)is a chargeable event in relation to the employee for the purposes of section 476 of the Income Tax (Earnings and Pensions) Act 2003 (whether or not an amount counts as employment income by virtue of that event), or

(b)would be such a chargeable event in relation to the employee if the conditions specified in sub-paragraph (2) were met.

(2)The conditions mentioned in sub-paragraph (1)(b) are—

(a)that the employee was resident and ordinarily resident in the United Kingdom at all material times, and

(b)that the duties of the employment by reason of which the option was granted were performed in the United Kingdom at all material times.]

Amount of reliefU.K.

15(1)The amount of the relief is equal to the difference between—U.K.

(a)the market value of the shares at the time [F7they are acquired pursuant to the option], and

(b)the total amount or value of any consideration given, by the recipient or another, in respect of the grant [F8of the option or the acquisition of the shares pursuant to] the option.

(2)The consideration mentioned in sub-paragraph (1)(b) does not include—

(a)the performance of any duties of, or in connection with, the employee’s employment with the employing company, or

(b)any amount paid or payable by the employee in pursuance of—

(i)an agreement within paragraph 3A(2) of Schedule 1 to the Contributions and Benefits Act (agreement for recovery from earner of secondary Class 1 contributions in respect of share option gain), or

(ii)an election under paragraph 3B of that Schedule (election transferring to earner liability for secondary Class 1 contributions in respect of share option gain).

(3)A just and reasonable apportionment shall be made for the purposes of this paragraph of any consideration given partly in respect of the grant [F9of the option or the acquisition of the shares pursuant to] the option and partly in respect of other matters.

(4)If the option was granted partly for the purposes of a business meeting the requirements of paragraph 3 (business must be within the charge to corporation tax) and partly for the purposes of a business in relation to which those requirements are not met, the amount of the relief shall be reduced to such extent as is just and reasonable.

Textual Amendments

F7Words in Sch. 23 para. 15(1) substituted (1.9.2003) by Finance Act 2003 (c. 14), Sch. 22 para. 66(2)(a)(4); S.I. 2003/1997, art. 2

F8Words in Sch. 23 para. 15(1) substituted (1.9.2003) by Finance Act 2003 (c. 14), Sch. 22 para. 66(2)(b)(4); S.I. 2003/1997, art. 2

F9Words in Sch. 23 para. 15(3) substituted (1.9.2003) by Finance Act 2003 (c. 14), Sch. 22 para. 66(3)(4); S.I. 2003/1997, art. 2

How relief is givenU.K.

16(1)The amount of the relief is allowed as a deduction in computing for the purposes of corporation tax the profits of the business for the purposes of which the option was granted.U.K.

(2)If the company carrying on the business is an investment company, the amount of the relief is treated as disbursed as expenses of management for the purposes of section 75 of the Taxes Act 1988.

(3)If the company carrying on the business is an insurance company carrying on life assurance business, the amount of the relief is included among the amounts the company may treat as part of its expenses of management for the purposes of section 76 of the Taxes Act 1988.

(4)If the option was granted for the purposes of more than one business within the charge to corporation tax, the amount of the deduction must be apportioned between them on a just and reasonable basis.

Timing of reliefU.K.

17(1)The relief is given for the accounting period in which the shares are acquired [F10pursuant to] the option.U.K.

(2)The time when the shares are acquired is when the recipient acquires a beneficial interest in the shares and not, if different, the time the shares are conveyed or transferred.

Textual Amendments

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Point in Time: This becomes available after navigating to view revised legislation as it stood at a certain point in time via Advanced Features > Show Timeline of Changes or via a point in time advanced search.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

Timeline of Changes

This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.

Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources