Income Tax (Earnings and Pensions) Act 2003

Tax advantages connected with holding of shares

494 No charge on removal of restrictions applying to shares

(1) Subsection (2) applies where a participant’s plan shares are subject to a provision for forfeiture in accordance with paragraph 32(1) of Schedule 2 (permitted restrictions: provision for forfeiture).

(2) The participant is not liable to income tax by virtue of—

(a) section 427 (charge on interest in shares ceasing to be only conditional or on disposal), or

(b) section 449 (charge on removal of restriction applying to shares),

when the provision for forfeiture is varied or removed.

(3) A participant is also not liable to income tax by virtue of section 449 if the event which, under section 450, is a chargeable event for the purposes of that section is the ending of the holding period in relation to free, matching or dividend shares held by the participant.

495 No charge on increase in value of shares of dependent subsidiary

(1) A participant is not liable to income tax by virtue of section 453 (charge on increase in value of shares of dependent subsidiary) in respect of any of the participant’s shares that are subject to the plan at or immediately before the appropriate time.

(2) “The appropriate time” means the time by reference to which a chargeable increase is determined for the purposes of that section (see section 454(3) or (5)).

496 No charge on cash dividend retained for reinvestment

(1) A participant is not liable to income tax in respect of an amount retained under paragraph 68(2) of Schedule 2 (amount of cash dividend not reinvested).

(2) The participant has no entitlement to a tax credit in respect of an amount so retained.

(3) This section does not affect any charge under—

(a) section 68B(1) or 251B(1) of ICTA (charge under Case V of Schedule D or Schedule F where cash dividend retained and then later paid out), or

(b) section 68B(2) or 251C(1) of ICTA (charge under Case V of Schedule D or Schedule F on dividend shares ceasing to be subject to plan),

or affect any tax credit in respect of an amount so charged.