Income and Corporation Taxes Act 1988 (c. 1)

SCHEDULES

SCHEDULE 9 U.K. APPROVED SHARE OPTION SCHEMES AND PROFIT SHARING SCHEMES

Modifications etc. (not altering text)

C1 Sch. 9 excluded (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 238(2)(c)(4), 289 (with ss. 60, 101(1), 171, 201(3))

C2 Sch. 9 modified (29.4.1996) by Finance Act 1996 (c. 8), s. 115

C3 Sch. 9 modified (29.4.1996) by Finance Act 1996 (c. 8), s. 116(3)

C4 Sch. 9 modified (28.7.2000) by Finance Act 2000 (c. 17), s. 49(1)(2)

C5 Sch. 9 continued for specified purposes (6.4.2003 with effect in accordance with s. 723(1) of the affecting Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 418(3) (with Sch. 7)

PART V U.K. REQUIREMENTS APPLICABLE TO PROFIT SHARING SCHEMES

30 (1) M1 The scheme must provide for the establishment of a body of persons resident in the United Kingdom (“the trustees”)— U.K.

(a) who, out of moneys paid to them by the grantor or, in the case of a group scheme, a participating company, are required by the scheme to acquire shares in respect of which the conditions in paragraphs 10 to 12 and 14 above are fulfilled; and

(b) who are under a duty to appropriate shares acquired by them to individuals who participate in the scheme, not being individuals who are ineligible by virtue of paragraph 8 or 35 of this Schedule; and

(c) whose functions with respect to shares held by them are regulated by a trust which is constituted under the law of a part of the United Kingdom and the terms of which are embodied in an instrument which complies with the provisions of paragraphs 31 to 34 below.

(2) M2 If at any time after the Board have approved the scheme, an alteration is made in the terms of the trust referred to in sub-paragraph (1)(c) above, the approval shall not have effect after the date of the alteration unless the Board have approved the alteration.

(3) M3 The scheme must provide that the total of the initial market values of the shares appropriated to any one participant in a year of assessment will not exceed the relevant amount.

(4) M4 In this Part of this Schedule “initial market value”, in relation to a participant’s shares, means the market value of those shares determined—

(a) except where paragraph (b) below applies, on the date on which the shares were appropriated to him; and

(b) if the Board and the trustees agree in writing, on or by reference to such earlier date or dates as may be provided for in the agreement.

Marginal Citations

M1 Source—1978 Sch.9 1(3)

M2 Source—1978 Sch.9 3(2)

M3 Source—1978 Sch.9 1 (4); 1983 s.25(1)

M4 Source—1978 s.53(4)

31 U.K. M5 The trust instrument shall provide that, as soon as practicable after any shares have been appropriated to a participant, the trustees will give him notice of the appropriation—

(a) specifying the number and description of those shares; and

(b) stating their initial market value.

Marginal Citations

M5 Source—1978 Sch.9 12

32 (1) M6 The trust instrument must contain a provision prohibiting the trustees from disposing of any shares, except as mentioned in paragraph 1(1)(a), (b) [F1 , (c) or (cc)] of Schedule 10, during the period of retention (whether by transfer to the participant or otherwise). U.K.

(2) The trust instrument must contain a provision prohibiting the trustees from disposing of any shares after the end of the period of retention and before the release date except—

(a) pursuant to a direction given by or on behalf of the participant or any person in whom the beneficial interest in his shares is for the time being vested; and

(b) by a transaction which would not involve a breach of the participant’s obligations under paragraph 2(2)(c) or (d) above.

Textual Amendments

F1 Words in Sch. 9 para. 32(1) substituted (with effect in accordance with s. 101(9)(10) of the amending Act) by Finance Act 1994 (c. 9), s. 101(5)

Marginal Citations

M6 Source—1978 Sch.9 13; 1980 s.46(13)

33 U.K. M7 The trust instrument must contain a provision requiring the trustees—

(a) subject to their obligations under paragraph 7 of Schedule 10 and to any such direction as is mentioned in paragraph 4(2) of that Schedule to pay over to the participant any money or money’s worth received by them in respect of or by reference to any of his shares other than money’s worth consisting of new shares within the meaning of paragraph 5 of that Schedule; and

(b) to deal only pursuant to a direction given by or on behalf of the participant or any person in whom the beneficial interest in his shares is for the time being vested with any right conferred in respect of any of his shares to be allotted other shares, securities or rights of any description.

Modifications etc. (not altering text)

C6 Sch. 9 para. 33(a) modified (with effect in accordance with s. 101(11)(12) of the affecting Act) by Finance Act 1994 (c. 9), s. 101(6) (with s. 101(14))

Marginal Citations

M7 Source—1978 Sch.9 14

34 U.K. M8 The trust instrument must impose an obligation on the trustees—

(a) to maintain such records as may be necessary to enable the trustees to carry out their obligations under paragraph 7 of Schedule 10; and

(b) where the participant becomes liable to income tax under Schedule E by reason of the occurrence of any event, to inform him of any facts relevant to determining that liability.

Marginal Citations

M8 Source—1978 Sch.9 15

35 (1) M9 An individual shall not be eligible to have shares appropriated to him under the scheme at any time unless he is at that time or was within the preceding 18 months a director or employee of the grantor or, in the case of a group scheme, of a participating company. U.K.

(2) M10 An individual shall not be eligible to have shares appropriated to him under the scheme at any time if in that year of assessment shares have been appropriated to him under another approved scheme established by the grantor or by—

(a) a company which controls or is controlled by the grantor or which is controlled by a company which also controls the grantor, or

(b) a company which is a member of a consortium owning the grantor or which is owned in part by the grantor as a member of a consortium.

Marginal Citations

M9 Source—1978 Sch.9 9

M10 Source—1978 Sch.9 10

36 (1) M11 Subject to paragraphs 8 and 35 above, every person who at any time— U.K.

(a) is [F2 an employee] or a full-time director of the grantor or, in the case of a group scheme, a participating company, and

(b) has been such an employee or director at all times during a qualifying period, not exceeding five years, ending at that time, and

(c) is chargeable to tax in respect of his office or employment under Case I of Schedule E,

must then be eligible (subject to paragraphs 8 and 35 of this Schedule) to participate in the scheme on similar terms and those who do participate must actually do so on similar terms.

(2) For the purposes of sub-paragraph (1) above, the fact that the number of shares to be appropriated to the participants in a scheme varies by reference to the levels of their remuneration, the length of their service or similar factors shall not be regarded as meaning that they are not eligible to participate in the scheme on similar terms or do not actually do so.

Textual Amendments

F2 Words in Sch. 9 para. 36(1)(a) substituted (with application in accordance with s. 137(7) of the amending Act) by Finance Act 1995 (c. 4), s. 137(4)

Marginal Citations

M11 Source—1978 Sch.9 2; 1983 s.25(4)