Finance Act 2001

Section 61.

SCHEDULE 13 E+W+S+N.I. EMPLOYEE SHARE OWNERSHIP PLANS: AMENDMENTS

Introductory E+W+S+N.I.

1 Schedule 8 to the Finance Act 2000 (c. 17) (employee share ownership plans) is amended in accordance with this Schedule.

The employment requirement E+W+S+N.I.

2 (1) In paragraph 14—

(a) in sub-paragraph (1), for paragraph (b)(i) and (ii) (periods counting towards qualifying period) substitute “ of a qualifying company ”, and

(b) after that sub-paragraph insert—

“(1A) Except in the case of a group plan, a qualifying company means—

(a) the company, or

(b) a company that when the individual was employed by it was an associated company—

(i) of the company, or

(ii) of another company qualifying under this paragraph.

(1B) In the case of a group plan, a qualifying company means—

(a) a company that is a participating company at the end of the qualifying period, or

(b) a company that when the individual was employed by it was a participating company, or

(c) a company that when the individual was employed by it was an associated company of—

(i) a company qualifying under paragraph (a) or (b), or

(ii) another company qualifying under this paragraph.”.

(2) This paragraph has effect in relation to awards of shares (within the meaning of Schedule 8 to the Finance Act 2000 (c. 17)) made after the passing of this Act.

Meaning of “salary” E+W+S+N.I.

3 (1) In paragraph 48—

(a) after “(PAYE)” insert “ or which would be if that individual were within the scope of Schedule E ”, and

(b) after “(expenses and benefits in kind)” add “or which would have been had the individual been within the scope of Schedule E”.

(2) This paragraph has effect in relation to any award of partnership shares (within the meaning of Schedule 8 to the Finance Act 2000 (c. 17)) in relation to which the eligibility time falls after the passing of this Act.

(3) For this purpose “the eligibility time” means the time at which an individual, in order to participate in the award, is required, in accordance with paragraph 13(1)(b) of that Schedule, to be eligible to so participate.

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

4 (1) After paragraph 78(2) add—

“(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.”.

(2) This paragraph has effect for the year 2001-02 and subsequent years of assessment.

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

5 (1) Omit paragraph 82(2) (reduction for tax paid on capital receipts).

(2) This amendment shall be deemed always to have had effect.

Charge on distributions in respect of unappropriated shares E+W+S+N.I.

6 (1) In paragraph 88—

(a) in sub-paragraph (3) (period during which special trust rates of tax do not apply if shares are readily convertible assets), for “Subject to sub-paragraph (4),” substitute “ If any of the shares in the company in question are readily convertible assets at the time the shares are acquired by the trustees, ”, and

(b) in sub-paragraph (4) (period during which special trust rates of tax do not apply if shares are not readily convertible assets), in paragraph (b) for “the shares in question” substitute “ any of the shares in that company ”.

(2) This paragraph has effect in relation to any shares acquired by the trustees of an employee share ownership plan after the passing of this Act.

(3) For the purposes of sub-paragraph (2), “the trustees of an employee share ownership plan” means the body of persons established in accordance with paragraph 68 of Schedule 8 to the Finance Act 2000 (c. 17).

Dividend shares ceasing to be subject to plan: tax credit E+W+S+N.I.

7 (1) In paragraph 93(2), for “when the relevant dividend is paid over to him” substitute “ when the shares cease to be subject to the plan ”.

(2) This amendment shall be deemed always to have had effect.

Gains accruing to trustees E+W+S+N.I.

8 (1) In paragraph 98—

(a) in sub-paragraph (2) (period within which shares that are readily convertible assets must be awarded if gains not to be chargeable), for the words from the beginning to “they” substitute “ If any of the shares in the company in question are readily convertible assets at the time the shares ”, and

(b) in sub-paragraph (3) (period within which shares that are not readily convertible assets must be awarded if gains not to be chargeable)—

(i) for the words from the beginning to “assets” substitute “ 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 ”, and

(ii) for “the shares in question” substitute “ any of the shares in that company ”.

(2) This paragraph has effect in relation to any shares acquired by the trustees of an employee share ownership plan after the passing of this Act.

(3) For the purposes of sub-paragraph (2), “the trustees of an employee share ownership plan” means the body of persons established in accordance with paragraph 68 of Schedule 8 to the Finance Act 2000.