Finance Act 2000

Part X E+W+S+N.I. Income tax

Introduction E+W+S+N.I.

77 (1) The provisions of this Part of this Schedule apply for income tax purposes in relation to an approved employee share ownership plan. E+W+S+N.I.

This is subject to sub-paragraph (2).

(2) Nothing in this Part applies to an individual if, at the time of the award in question, he is not chargeable to tax under Schedule E in respect of the employment by reference to which he meets the requirement of paragraph 14 (the employment requirement) in relation to the plan.

No charge on award of shares etc. E+W+S+N.I.

78 (1) Notwithstanding that the beneficial interest in the shares passes to the employee— E+W+S+N.I.

(a) on the award to him of free, matching or partnership shares under the plan, or

(b) on the acquisition on his behalf of dividend shares under the plan,

the value of that interest at the time of the award or acquisition is not treated as income of his chargeable to tax.

(2) An employee is not chargeable to tax under Schedule E by virtue of section 162(1) of the Taxes Act 1988 (deemed loan in case of shares acquired at an under-value) in respect of the award to him of shares under the plan.

This does not affect any charge to tax under section 162(6) of that Act (stop-loss provision).

[F1 (3) Incidental expenditure of the trustees or the employer in operating the plan is not treated as giving rise to any charge to income tax on employees.]

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F1 Sch 8. para. 78(3) inserted (11.5.2001 with effect as mentioned in Sch. 13 para. 4(2) of the amending Act) by 2001 c. 9, Sch. 13 para. 4

Capital receipts in respect of participant’s shares E+W+S+N.I.

79 (1) Where— E+W+S+N.I.

(a) a capital receipt is received by a participant in respect of or by reference to any of his plan shares, and

(b) the plan shares in respect of or by reference to which it is received are—

(i) free, matching or partnership shares that were awarded to the participant fewer than five years before he received the capital receipt, or

(ii) dividend shares that were acquired on his behalf fewer than three years before he received that receipt,

the participant is chargeable to income tax under Schedule E for the tax year in which the capital receipt is received by him on the amount or value of the receipt.

(2) For the purposes of this paragraph any money or money’s worth is a “capital receipt” subject to the following provisions.

(3) Money or money’s worth is not a capital receipt for the purposes of this paragraph to the extent that—

(a) it constitutes income in the hands of the recipient for the purposes of income tax (or would do so but for this Part of this Schedule), or

(b) it consists of the proceeds of disposal of the shares, or

(c) it consists of new shares within the meaning of paragraph 115 (company reconstructions).

(4) If, pursuant to a direction given by or on behalf of the participant for the purposes of paragraph 72(1), the trustees—

(a) dispose of some of the rights under a rights issue, and

(b) use the proceeds of that disposal to exercise other such rights,

the money or money’s worth that constitutes the proceeds of that disposal is not a capital receipt for the purposes of this paragraph.

The references in this sub-paragraph to rights under a rights issue are to rights, conferred in respect of a participant’s plan shares, to be allotted, on payment, other shares or securities or rights of any description in the same company.

(5) This paragraph does not apply in relation to a capital receipt referable to the shares of a participant if it is received by the participant’s personal representative after his death.

Exclusion of certain charges in relation to participant’s shares E+W+S+N.I.

80 (1) There is no charge to tax on the participant under— E+W+S+N.I.

(a) section 140A of the M1 Taxes Act 1988 (charge on conditional acquisition of shares), or

(b) section 78 of the Finance Act 1988 (charge on removal of restriction),

when any provision for forfeiture to which the shares are subject, in accordance with paragraph 65 (permitted restrictions: provision for forfeiture), is varied or removed.

(2) A participant is not chargeable to tax under Schedule E by virtue of section 78 of the Finance Act 1988 (charge on removal of restriction) if the chargeable event (within the meaning of that section) is the ending of the holding period in relation to his free, matching or dividend shares.

(3) A participant is not chargeable to tax under Schedule E by virtue of section 79 of that Act (charge on chargeable increase in value) in respect of any shares of his that are subject to the plan at the end of the period for which the chargeable increase is determined for the purposes of that section.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Marginal Citations

M1 1988 c. 39.

Charge on free or matching shares ceasing to be subject to plan E+W+S+N.I.

81 (1) When free or matching shares cease to be subject to the plan, income tax may be chargeable depending on the period that has elapsed between— E+W+S+N.I.

(a) the date on which the shares were awarded to the participant, and

(b) the date on which they cease to be subject to the plan.

(2) If the period is less than three years, the participant is chargeable to tax under Schedule E on the market value of the shares when they cease to be subject to the plan.

(3) If the period is three years or more but less than five years, the participant is chargeable to tax under Schedule E on—

(a) the market value of the shares at the date they were awarded to him, or

(b) the market value of the shares when they cease to be subject to the plan,

whichever is less.

(4) Where the participant is charged to tax under sub-paragraph (3)(a) the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.

(5) There is no charge to tax under this paragraph on the forfeiture of free or matching shares.

(6) This paragraph has effect subject to—

paragraph 82 (charge to tax on disposal of beneficial interest in shares during the holding period); and

paragraph 87 (circumstances in which there is no charge to tax on shares ceasing to be subject to plan).

(7) Except as provided by this paragraph and paragraph 82 there is no charge to tax on free or matching shares ceasing to be subject to the plan.

Charge on disposal of beneficial interest during the holding period E+W+S+N.I.

82 (1) Where free or matching shares cease to be subject to the plan by virtue of a participant, in breach of his obligations under paragraph 31(1)(b), assigning, charging or otherwise disposing of his beneficial interest in those shares— E+W+S+N.I.

(a) paragraph 81 does not apply, and

(b) the participant is chargeable to income tax under Schedule E on the market value of the shares when they cease to be subject to the plan.

[F2 (2) Where the participant is charged to tax under sub-paragraph (1) the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.]

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F2 Sch. 8 para. 82(2) repealed (retrospectively) by 2001 c. 9, ss. 61, 110, Sch. 13 para. 5(1), Sch. 33 Pt. 2(2)

Partnership share money deducted before tax E+W+S+N.I.

83 (1) Partnership share money deducted from an employee’s salary in accordance with a partnership share agreement is not regarded as income of the employee chargeable to tax under Schedule E. E+W+S+N.I.

(2) The deduction of partnership share money shall be disregarded for the purpose of ascertaining the amount of—

(a) the employee’s remuneration for the purposes of Chapter I of Part XIV of the Taxes Act 1988 (retirement benefit schemes), or

(b) the employee’s relevant earnings for the purposes of Chapter III or IV of that Part (retirement annuities or personal pension schemes).

Charge on partnership share money paid over to employee E+W+S+N.I.

84 (1) An individual is chargeable to income tax under Schedule E on any amount paid over to him under— E+W+S+N.I.

paragraph 36(4) (deductions in excess of permitted maximum amount);

paragraph 40(4)(b) or 42(5)(b) (surplus partnership share money remaining after acquisition of shares);

paragraph 42(6) (partnership share money paid over on individual leaving relevant employment);

paragraph 42(7) (partnership share money paid over where accumulation period brought to an end by event specified in plan);

paragraph 45(3) (partnership share money paid over on withdrawal from partnership share agreement); or

paragraph 46 (partnership share money paid over on withdrawal of plan approval or termination of plan).

(2) A charge to tax under sub-paragraph (1) arises at the time the amount is paid over.

Charge on cancellation payments in respect of partnership share agreement E+W+S+N.I.

85 An individual is chargeable to tax under Schedule E on the amount or value of any money or money’s worth received by him in respect of the cancellation of a partnership share agreement entered into by him. E+W+S+N.I.

Charge on partnership shares ceasing to be subject to plan E+W+S+N.I.

86 (1) When partnership shares cease to be subject to the plan, income tax may be chargeable depending on the period that has elapsed between— E+W+S+N.I.

(a) the acquisition date in respect of those shares (as defined by paragraph 40(2) or, as the case may be, 42(3)), and

(b) the date on which they cease to be subject to the plan.

(2) If the period is less than three years, the employee is chargeable to income tax under Schedule E on an amount equal to the market value of the shares when they cease to be subject to the plan.

(3) If the period is three years or more but less than five years, the employee is chargeable to income tax under Schedule E on—

(a) the amount of partnership share money used to acquire the shares, or

(b) the market value of the shares when they cease to be subject to the plan,

whichever is less.

(4) Where the participant is charged to tax under sub-paragraph (3)(a) the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.

(5) This paragraph has effect subject to paragraph 87 (circumstances in which there is no charge on shares ceasing to be subject to plan).

(6) Except as provided by this paragraph, there is no charge to income tax on the employee on partnership shares ceasing to be subject to the plan.

Circumstances in which there is no charge on shares ceasing to be subject to plan E+W+S+N.I.

87 (1) There is no charge to tax on shares ceasing to be subject to the plan on the occurrence of any of the following events. E+W+S+N.I.

(2) Those events are the participant ceasing to be in relevant employment—

(a) because of injury or disability;

(b) on being dismissed by reason of redundancy;

(c) by reason of a transfer to which the M2 Transfer of Undertakings (Protection of Employment) Regulations 1981 apply;

(d) by reason of a change of control or other circumstances ending the associated company status of the company by which he is employed;

(e) by reason of his retirement on or after he reaches retirement age; or

(f) on his death.

(3) In sub-paragraph (2)(b) “redundancy” has the same meaning as in the M3 Employment Rights Act 1996 or the M4 Employment Rights (Northern Ireland) Order 1996.

(4) In sub-paragraph (2)(e) “retirement age” means the retirement age specified in the plan, which—

(a) must be the same for men and women, and

(b) must be not less than 50.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Marginal Citations

M2 S.I. 1981/1794.

M3 1996 c. 18.

M4 SI. 1996/1919 (N.I. 16).

Dividends etc. in respect of unappropriated shares E+W+S+N.I.

88 (1) This paragraph applies to income of the trustees consisting of dividends or other distributions in respect of shares held by them in relation to which the requirements of Part VIII are met. E+W+S+N.I.

(2) Income to which this paragraph applies is income to which section 686 of the Taxes Act 1988 (accumulation and discretionary trusts: special rates of tax) applies only if and when—

(a) the period applicable to the shares under the following provisions comes to an end without the shares being awarded to a participant in accordance with the plan, or

(b) if earlier, the shares are disposed of by the trustees.

(3) [F3 If any of the shares in the company in question are readily convertible assets at the time the shares are acquired by the trustees,], the period applicable to the shares is the period of two years beginning with the date on which the shares were acquired by the trustees.

(4) If at the time of the acquisition of the shares by the trustees none of the shares in the company in question are readily convertible assets, the period within which the shares must be awarded is—

(a) five years beginning with the date on which the shares were acquired by the trustees, or

(b) if within that period the shares in question[F4 any of the shares in that company]become readily convertible assets, two years beginning with the date on which they did so,

whichever ends first.

[F5 (4A) In the case of shares acquired by the trustees by virtue of a payment in respect of which a deduction is allowed under paragraph 112A, the period applicable to the shares is (notwithstanding sub-paragraphs (3) and (4)) the period of ten years beginning with the date of acquisition.]

(5) For the purposes of determining whether shares are awarded to a participant within the period applicable under the above provisions, 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) For the purposes of this paragraph shares which are subject to provision for forfeiture are treated as acquired by the trustees if and when the forfeiture occurs.

(7) In this paragraph references to the shares being awarded include references to shares being acquired on behalf of a participant as dividend shares.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F3 Words in Sch. 8 para. 88(3) substituted (11.5.2001 with effect as mentioned in Sch. 13 para. 6(2)(3) of the amending Act) by 2001 c. 9, s. 61, Sch. 13 para. 6(1)(a)(2)(3)

F4 Words in Sch. 8 para. 88(4) substituted (11.5.2001 with effect as mentioned in Sch. 13 para. 6(2)(3) of the amending Act) by 2001 c. 9, S. 61, Sch. 13 para. 6(1)(b)(2)(3)

F5 Sch. 8 para. 88(4A) inserted (6.4.2003) by 2002 c. 34, ss. 3(2), 5

Reinvestment of cash dividend on behalf of participant E+W+S+N.I.

89 (1) The amount applied by the trustees in acquiring dividend shares on behalf of a participant is not treated as income of the participant for any tax purposes. E+W+S+N.I.

(2) The participant has no entitlement to a tax credit in respect of the amounts of dividends so applied.

(3) Sub-paragraphs (1) and (2) do not affect—

(a) any charge under paragraph 93(1) (charge on dividend shares ceasing to be subject to plan), or

(b) any entitlement to a tax credit in respect of the amount so charged.

(4) Section 234A(4) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall not apply in relation to any amount applied by the trustees in acquiring dividend shares on behalf of a participant.

This is subject to paragraph 93(4).

Repayment of excess cash dividend E+W+S+N.I.

90 Section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall apply in relation to the balance of any cash dividend paid over to the participant under paragraph 54(3) as if it were a payment to which subsection (4)(b) of that section applies. E+W+S+N.I.

Treatment of cash dividend retained for reinvestment E+W+S+N.I.

91 (1) An amount retained under paragraph 58(1) (amount of cash dividend not reinvested) shall not be treated as income of the participant for any tax purposes. E+W+S+N.I.

(2) The participant has no entitlement to a tax credit in respect of any such amount.

(3) This paragraph does not affect any charge—

(a) under paragraph 92 (treatment of cash dividend retained and then later paid out), or

(b) paragraph 93 (charge on dividend shares ceasing to be subject to plan),

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

Treatment of cash dividend retained and then later paid out E+W+S+N.I.

92 (1) Where a cash dividend is paid over to a participant under paragraph 58(2) (cash dividend paid over if not reinvested), the participant is chargeable to tax on that amount— E+W+S+N.I.

(a) under Schedule F, or

(b) to the extent that the dividend is a foreign cash dividend, under Case V of Schedule D,

for the tax year in which the dividend is paid over to him.

(2) For the purposes of determining the tax credit (if any) to which the participant is entitled under section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions), the reference in subsection (1) of that section to the tax credit fraction in force when the distribution is made shall be read as a reference to the fraction in force when the dividend is paid over to him.

(3) Section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall apply in relation to an amount paid under paragraph 58(2) as if—

(a) it were a payment to which subsection (4)(b) of that section applies, and

(b) the cash dividend had been paid when the payment was paid over to the participant under paragraph 58(2).

Charge on dividend shares ceasing to be subject to plan E+W+S+N.I.

93 (1) If dividend shares cease to be subject to the plan before the end of the period of three years beginning with the date on which the shares were acquired on his behalf, the participant is chargeable to tax on the amount of the relevant dividend— E+W+S+N.I.

(a) under Schedule F, or

(b) to the extent that the amount represents a foreign cash dividend, under Case V of Schedule D,

for the tax year in which the shares cease to be subject to the plan.

For this purpose “the relevant dividend" is the cash dividend applied to acquire those shares on the participant’s behalf.

(2) For the purposes of determining the tax credit (if any) to which the participant is entitled under section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions), the reference in subsection (1) of that section to the tax credit fraction in force when the distribution is made shall be read as a reference to the fraction in force[F6 when the shares cease to be subject to the plan].

(3) Where the participant is charged to tax under this paragraph the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.

For this purpose “the tax due” means the amount of tax due after deduction of the tax credit determined under sub-paragraph (2).

(4) Section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall apply in relation to the relevant dividend as if it were a payment to which subsection (4)(b) of that section applies.

(5) This paragraph has effect subject to paragraph 87 (circumstances in which there is no charge on shares ceasing to be subject to plan).

(6) Except as provided by this paragraph there is no charge to tax on dividend shares ceasing to be subject to the plan.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F6 Words in Sch. 8 para. 93(2) substituted (retrospectively) by 2001 c. 9, s. 62 Sch. 13 para. 7

93 (1) If dividend shares cease to be subject to the plan before the end of the period of three years beginning with the date on which the shares were acquired on his behalf, the participant is chargeable to tax on the amount of the relevant dividend— E+W+S+N.I.

(a) under Schedule F, or

(b) to the extent that the amount represents a foreign cash dividend, under Case V of Schedule D,

for the tax year in which the shares cease to be subject to the plan.

For this purpose “the relevant dividend" is the cash dividend applied to acquire those shares on the participant’s behalf.

(2) For the purposes of determining the tax credit (if any) to which the participant is entitled under section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions), the reference in subsection (1) of that section to the tax credit fraction in force when the distribution is made shall be read as a reference to the fraction in force when the relevant dividend is paid over to him.

(3) Where the participant is charged to tax under this paragraph the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.

For this purpose “the tax due” means the amount of tax due after deduction of the tax credit determined under sub-paragraph (2).

(4) Section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall apply in relation to the relevant dividend as if it were a payment to which subsection (4)(b) of that section applies.

(5) This paragraph has effect subject to paragraph 87 (circumstances in which there is no charge on shares ceasing to be subject to plan).

(6) Except as provided by this paragraph there is no charge to tax on dividend shares ceasing to be subject to the plan.

PAYE: shares ceasing to be subject to plan E+W+S+N.I.

94 Where as a result of shares ceasing to be subject to the plan a participant is chargeable to tax under this Part of this Schedule E+W+S+N.I.

[(a) section 203F of the Taxes Act 1988 (PAYE: readily convertible assets) shall have effect as if the participant were being provided with assessable income in the form of those shares—

(i) at the time the shares cease to be subject to the plan, and

(ii) in respect of the relevant employment in which the participant is employed at that time (or, if he is not employed in relevant employment at that time, the relevant employment in which he was last employed before that time), and

(b) subsection (3) of that section]

shall have effect as if the reference in that subsection to the amount of income likely to be chargeable to tax under Schedule E in respect of the provision of the asset were a reference to the amount on which tax is likely to be chargeable under this Part of this Schedule by virtue of the shares ceasing to be subject to the plan.

PAYE: shares ceasing to be subject to the plan E+W+S+N.I.

95 (1) Sub-paragraphs (2) to (5) apply where as a result of any shares (“the relevant shares”) ceasing to be subject to the plan— E+W+S+N.I.

(a) a participant is chargeable to income tax under Schedule E in accordance with this Part of this Schedule, and

(b) an obligation to make a PAYE deduction arises in respect of that charge.

(2) The trustees must pay to the employer company a sum which is sufficient to enable the employer company to discharge that obligation.

This is subject to sub-paragraphs (3) and (7).

(3) Sub-paragraph (2) only applies where, or to the extent that, the plan does not require the participant to pay the employer company a sum that is sufficient to discharge the obligation mentioned in sub-paragraph (1)(b).

(4) Section 203J(1) of the Taxes Act 1988 (sections 203B to 203I: accounting for tax) shall have effect as if it required the deduction of income tax to be made from any sum or sums received by the employer—

(a) from the trustees under sub-paragraph (2), or

(b) from the participant in accordance with the plan, as mentioned in sub-paragraph (3).

(5) After making the necessary PAYE deduction from the sum or sums received as mentioned in sub-paragraph (4), the employer company shall pay any remaining amounts to the participant.

(6) For the purposes of this paragraph “the employer company” means [F7 the company which employs the participant in relevant employment at the time when the shares cease to be subject to the plan (or, if the participant is not employed in relevant employment at that time, the company which last employed him in relevant employment before that time), provided that that company is one to whom] the PAYE regulations (within the meaning of section 203L(3) of the Taxes Act 1988) at that time apply.

(7) Where, as a result of any shares ceasing to be subject to the plan, a participant is chargeable to income tax under Schedule E in accordance with this Part and either—

(a) there is no company which falls within sub-paragraph (6), or

(b) the Inland Revenue are of the opinion that it is impracticable for the company which falls within that sub-paragraph to make a PAYE deduction and accordingly direct that this sub-paragraph shall apply,

then sub-paragraph (2) shall not apply and the trustees shall make a PAYE deduction in respect of an amount equal to that on which income tax is payable as if the participant were a former employee of the trustees.

(8) In a case where sub-paragraph (7) applies, section 203C of the Taxes Act 1988 (PAYE: employee of non-UK employer) does not apply.

(9) Where—

(a) a participant disposes of his beneficial interest in any of his plan shares to the trustees, and

(b) the trustees are deemed by virtue of paragraph 74 to have disposed of the shares in question,

this paragraph shall apply as if the consideration payable by the trustees to the participant on the disposal had been received by the trustees as the proceeds of disposal of plan shares.

(10) For the purposes of this paragraph “PAYE deduction” means a deduction required by regulations under section 203 of the Taxes Act 1988.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F7 Words in Sch. 8 para. 95(6) substituted (24.7.2002 with effect as mentioned in s. 39(7) of the amending Act) by 2002 c.23, s. 39(3)(7)

PAYE: capital receipts E+W+S+N.I.

96 (1) Where the trustees receive a sum of money which constitutes (or forms part of) a capital receipt in respect of which a participant is chargeable to income tax under Schedule E, in accordance with this Part of this Schedule, when it is received by him— E+W+S+N.I.

(a) the trustees shall pay out of that sum of money to the employer company an amount equal to that on which income tax is so payable, and

(b) the employer company shall then pay over that amount to the participant, but in so doing shall make a PAYE deduction.

This is subject to sub-paragraph (3).

(2) For the purposes of this paragraph “the employer company” means [F8 the company which employs the participant in relevant employment at the time the trustees receive the sum of money referred to in sub-paragraph (1) (or, if the participant is not employed in relevant employment at that time, the company which last employed him in relevant employment before that time), provided that that company is one to whom] the PAYE regulations (within the meaning of section 203L(3) of the Taxes Act 1988) at that time apply

(3) Where the trustees receive a sum of money to which sub-paragraph (1) applies but—

(a) there is no company which falls within sub-paragraph (2), or

(b) the Inland Revenue are of the opinion that it is impracticable for the company which falls within that sub-paragraph to make a PAYE deduction and accordingly direct that this sub-paragraph shall apply,

then, in paying over to the participant the capital receipt, the trustees shall make a PAYE deduction in respect of an amount equal to that on which income tax is payable as mentioned in sub-paragraph (1) as if the participant were a former employee of the trustees.

(4) In a case where sub-paragraph (3) applies, section 203C of the Taxes Act 1988 (PAYE: employee of non-UK employer) does not apply.

(5) For the purposes of this paragraph “PAYE deduction” means a deduction required by regulations under section 203 of the Taxes Act 1988.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F8 Words in Sch. 8 para. 96(2) substituted (24.7.2002 with effect as mentioned in s. 39(7) of the amending Act) by 2002 c. 23, s. 39(4)(7)