3U.K.Chapter 2 of Part 7 (restricted securities) is amended as follows.
4(1)Section 424 (employment-related securities which are not restricted securities or restricted interest in securities) is renumbered as subsection (1) of that section.U.K.
(2)In that subsection—
(a)at the end of paragraph (a) insert “ or ”, and
(b)omit paragraph (c) (employment-related securities which are, or are an interest in, redeemable securities) and the word “or” before it.
(3)After that subsection insert—
“(2)Subsection (1) does not apply if the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions.”
(4)This paragraph has effect on and after 2nd December 2004 and applies in relation to employment-related securities acquired before that date, as well as those acquired on or after that date; and section 422 of ITEPA 2003 (application of Chapter 2 of Part 7) applies to employment-related securities in relation to which this paragraph has effect and which were acquired before that date with the omission of the words “at the time of the acquisition”.
5(1)In section 428 (amount of charge under section 426), after subsection (9) insert—U.K.
“(10)But subsection (9) does not apply if something which affects the employment-related securities has been done (at or before the time of the chargeable event) as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.”
(2)This paragraph has effect where something such as is mentioned in section 428(10) of ITEPA 2003 has been done on or after 2nd December 2004.
6(1)In section 429 (exception from charge under section 426 for certain company shares), for subsection (1A) substitute—U.K.
“(1A)This subsection is satisfied unless something which affects the employment-related securities has been done (at or before the time when section 426 would apply) as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.”
(2)This paragraph has effect where something such as is mentioned in section 429(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
7(1)After section 431A insert—U.K.
Where employment-related securities are restricted securities or a restricted interest in securities, the employer and the employee are to be treated as making an election under section 431(1) in relation to the employment-related securities if the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions.”
(2)This paragraph has effect in relation to employment-related securities acquired on or after 2nd December 2004.