Part 9Special rules about settlements and trustees
Chapter 5Share incentive plans
488Application of section 479 to trustees of F5Schedule 2 share incentive plans
1
This section applies if—
a
income arises to the trustees of F1a Schedule 2 share incentive plan, and
b
the income consists of dividends or other distributions in respect of shares held by the trustees in relation to which the requirements of Part 4 of Schedule 2 to ITEPA 2003 (F6... share incentive plans: types of shares that may be awarded) are met.
2
Section 479 applies in relation to the income only if and when condition A or condition B has been met.
3
Condition A is that—
a
the applicable period in relation to the shares has ended, and
b
that period came to an end without the shares being awarded to a participant in accordance with the plan.
4
Condition B is that the trustees disposed of the shares before the end of the applicable period in relation to the shares.
5
For the purpose of determining whether shares are awarded to a participant within the applicable period in relation to them, shares acquired by the trustees at an earlier time are taken to be awarded to a participant before shares of the same class acquired by the trustees at a later time.
6
References in this section to shares being awarded to a participant include references to the shares being acquired on behalf of the participant as dividend shares.
489“The applicable period” in relation to shares
1
This section sets out how the applicable period in relation to any shares (“the relevant shares”) is determined for the purposes of section 488.
2
The length of the applicable period depends on whether any shares in the relevant company were readily convertible assets at the time the relevant shares were acquired by the trustees.
3
If any were, the applicable period is the period of two years beginning with the acquisition date.
4
If none were, the applicable period is—
a
the period of 5 years beginning with the acquisition date, or
b
if within that period any shares in the relevant company become readily convertible assets, the period of two years beginning with the date on which they did so,
whichever ends first.
5
Subsections (2) to (4) are subject to subsection (6).
6
If the relevant shares were acquired by the trustees by virtue of a payment in respect of which a deduction is allowed under F3section 989 of CTA 2009 (deduction for contribution to plan trust), the applicable period is the period of 10 years beginning with the acquisition date.
7
In this section—
“the acquisition date” means the date on which the trustees acquired the relevant shares,
“readily convertible assets” has, subject to subsection (8), the meaning given by sections 701 and 702 of ITEPA 2003, and
“the relevant company” means the company in which the relevant shares are shares.
8
In determining for the purposes of this section whether shares are readily convertible assets, ignore any market for the shares that—
a
is created by virtue of the trustees acquiring shares for the purposes of the F2Schedule 2 share incentive plan, and
b
exists solely for the purposes of that plan.
490Interpretation of Chapter
1
This Chapter forms part of the SIP code (see section 488 of ITEPA 2003 (F4... share incentive plans)).
2
Therefore expressions used in this Chapter and contained in the index at the end of Schedule 2 to ITEPA 2003 have the meaning indicated by that index.
3
For the purposes of this Chapter shares which are subject to provision for forfeiture are treated as acquired by the trustees if and when the forfeiture occurs.