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Income Tax (Earnings and Pensions) Act 2003

Paragraph 9: The “no material interest” requirement

3390.This paragraph derives from paragraph 8 of Schedule 9 to ICTA and from section 187(3) of ICTA and there are some drafting changes.

3391.It is the introductory provision, which precludes admission into the scheme of an individual with a “material” interest in a close company whose shares are subject to the option or its parent company (or certain members of a consortium).

3392.The exact length of the preceding 12-month period has been clarified. It is expressed so as to include the “trigger date”, that is the date when the test is made. By so including it explicitly, the period is shorter by one day and so in favour of the taxpayer.

3393.The interests of the option holder are aggregated with those of any associates. “Associate” is defined in paragraphs 12 to 14 of this Schedule.

3394.The definition of close companies is subject to sections 414 and 415 of ICTA and there is now a short explanatory summary of those sections.

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Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.


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