The Social Security (Contributions) (Amendment No. 5) Regulations 2003

Amendment of the principal Regulations

7.—(1) Amend Schedule 2 (calculation of earnings for the purposes of earnings-related contributions in particular cases) as follows.

(2) In paragraph 5 for “the amount of income likely to be chargeable to tax under Schedule E”, in each place where it occurs, substitute “the amount of general earnings”.

(3) For paragraph 7 and the heading preceding it substitute—

“Convertible and restricted interests in securities and convertible and restricted securities

7.   The amount of earnings comprised in any payment by way of the conferment of—

(a) a convertible interest in securities;

(b) a restricted interest in securities; or

(c) an interest in convertible or restricted securities,

falling to be taken into account in computing a person’s earnings from employed earner’s employment shall be computed in the same manner, and shall be taken into account at the same time, as applies under Chapters 1 to 5 of Part 7 of ITEPA 2003, as substituted or inserted by Schedule 22 to the Finance Act 2003(1), for the purpose of computing his employment income.”.

(4) Omit paragraphs 8 to 10.

(5) For paragraph 11 and the heading preceding it substitute—

“Exercise of a replacement right to acquire shares, obtained as an earner before 6th April 1999

11.— (1) This paragraph applies if—

(a) an earner obtained, before 6th April 1999, a right to acquire shares in a body corporate;

(b) the earner subsequently obtained a replacement right (within the meaning given in paragraph 16A(3) of Part 9 of Schedule 3(2));

(c) the replacement right is exercised;

(d) paragraph 11A of this Schedule(3) does not apply; and

(e) paragraph 16A of Part 9 of Schedule 3 does not apply because sub-paragraph (4) of that paragraph is not satisfied.

(2) If this paragraph applies, the amount of earnings comprised in any payment realised by the exercise of the replacement right shall be calculated or estimated in accordance with sub-paragraph (3).

(3) The basis for calculating the amount of a gain realised by the exercise of the replacement right shall be the best estimate that can reasonably be made of the amount found as follows.”.

(6) In paragraph 11A(2) after “paragraph 16” insert “or 16A”.

(7) Omit paragraph 12.

(1)

See paragraphs 2 to 10 of Schedule 22.

(2)

Paragraph 16A is inserted by regulation 12(13) of this instrument as part of the substitution for the former paragraph 16.

(3)

Paragraph 11A was inserted by regulation 3 of S.I. 2003/1059.