Omitted material
Schedule 7: Transitionals and Savings
Part 1: Continuity of the law
Paragraphs 1 to 7
3650.These paragraphs ensure continuity of the law, despite the fact that this Act repeals and rewrites provisions. Paragraph 2 is included to ensure that provisions in the Act which change the law are not subject to the general proposition about continuity in paragraph 1.
Part 2: Employment income: charge to tax
Paragraph 8
3651.Section 202A(2)(a) of ICTA states that the provisions determining what emoluments are chargeable in a particular year apply “whether or not the emoluments are for that year or for some other year of assessment”. The charging provisions in Chapters 4 and 5 of Part 2 of this Act give effect to this statement in the various sections determining taxable earnings in a tax year.
3652.This paragraph ensures that where those charging provisions apply to general earnings for “some other tax year” the reference to some other tax year can include years before 2003-04.
3653.Sub-paragraphs (3) and (4) derive from the transitional provisions in sections 36 and 39 of FA 1989 which amended Case III of Schedule E as well as inserting paragraph (4A) into section 19(1) of ICTA. They preserve continuity of tax treatment for any general earnings for a tax year before 1989-90 that are remitted to the UK in 2003-04 or later if those earnings would have been within Case III of Schedule E before it was amended in FA 1989.
Paragraphs 9 to 11
3654.A claim to relief for delayed remittances made under section 35 could include delayed remittances relating to earnings for tax years before 2003-04 and the claimant may elect under section 36 to have those delayed remittances attributed to particular earlier years. Paragraphs 9 to 11 deal with the fact that this Act changes the terminology used to describe the income making up the delayed remittances and the charge to tax on them.
Paragraph 12
3655.This paragraph deals with the treatment of disputes as to domicile or ordinary residence which arise after the commencement of this Act, but which relate to income to be charged to tax in the tax year 2002-03 or any earlier tax year. The effect of this transitional is that such disputes will be governed by section 207 of ICTA, and not by sections 42 and 43 of this Act.
Paragraph 13
3656.This paragraph sets out how the provisions in Chapter 7 of Part 2 should be read in relation to times before 6 April 2003, by reference to the ICTA terminology rather than the language of this Act.
Paragraph 14
3657.This paragraph reflects the fact that the changes made to the treatment of construction industry workers in section 134 of ICTA by section 55 of FA 1998 only have effect with regard to payments for services provided on or after 6 April 1998.
Part 3: Employment income: earnings and benefits etc. treated as earnings
Paragraph 15
3658.This paragraph preserves the effectiveness of notifications made before 6 April 2003 for tax years beginning on or after that date. It carries forward the transitional provisions in section 166 of ICTA. It also deals with the change in terminology between the source legislation and this Act where, in the latter, the notification is called a “dispensation”. That reflects the commonly used description of the notification. The provisions in the following paragraph may modify the scope of those dispensations.
Paragraph 16
3659.This paragraph modifies the effect of any dispensation that was in force before 6 April 2002 to preserve the modifications that were made to such dispensations by section 58 of FA 2001. Those modifications arose from the enactment of the provisions for mileage allowance payments and mileage allowance relief. From that date any element in a pre-existing dispensation relating to payments made, or benefits or facilities provided, in respect of expenses incurred in connection with the use of a vehicle by an employee for business travel was revoked. This paragraph ensures that such a revocation is retained in the operation of the dispensation on and after 6 April 2003.
Paragraph 17
3660.Section 168(2) of ICTA applies the provisions of Chapter 2 of Part 5 of that Act only to an employment the emoluments of which fall to be assessed under Schedule E. That proviso is also imported into the rules for living accommodation by section 145(8)(b). A similar proviso is contained in section 144(5) of ICTA for vouchers and credit-tokens.
3661.The concept of an employment the emoluments of which fall to be assessed under Schedule E has been reproduced for the purposes of the benefits code in this Act as “a taxable employment under Part 2”, defined in section 66(3). In cases where it is necessary to consider whether there is a “taxable employment” before 6 April 2003, paragraph 17 of this Schedule explains how to translate this concept back into the rules in ICTA from which it derives.
Paragraph 18
3662.The general transitional provision for “employment” and related expressions in paragraph 17 does not provide the correct continuity for the use of employment in section 89(1)(c). This paragraph provides the correct replacement terms to ensure continuity.
Paragraph 19
3663.This paragraph concerns notices under section 144(1) of ICTA. It preserves the effectiveness of existing notifications (described as “dispensations” in this Act), subject to the modifications in paragraph 20.
Paragraph 20
3664.This paragraph derives from section 58 of FA 2001. It preserves the modifications that those provisions make to the effectiveness of existing notifications to take account of the introduction of mileage allowance payments and mileage allowance relief.
Paragraph 21
3665.This paragraph derives from section 146(8) of ICTA, which disapplies section 146(6) in cases where the employee first occupied the living accommodation in question before 31 March 1983.
Paragraphs 22
3666.This paragraph deals with capital contributions made by an employee before 6 April 2003 towards the cost of a car, other than a classic car (as dealt with in section 147) or accessories attached to it. The paragraph ensures that those contributions continue to be taken into account in calculating the cash equivalent of the benefit of the car for appropriate tax years beginning on or after that date. The paragraph also deals with changes in terminology between the source legislation and this Act.
Paragraph 23
3667.This paragraph deals with capital contributions made by an employee before 6 April 2003 towards the cost of a classic car (as dealt with in section 147) or accessories attached to it. The paragraph ensures that those contributions continue to be taken into account in calculating the cash equivalent of the benefit of the car for appropriate tax years beginning on or after that date. The paragraph also deals with changes in terminology between the source legislation and this Act.
Paragraph 24
3668.This paragraph deals with the consequences of the changes in terminology between the source legislation and this Act where a van is available to only one employee for a period exceeding 30 days that straddles 6 April 2003. The paragraph ensures that the relevant provisions apply irrespective of that employee’s level of earnings (“emoluments” in the source legislation language).
Paragraph 25
3669.Sub-paragraph (1) ensures that loans may be employment-related regardless of when they were made, even if that was before FA 1976 (which introduced the beneficial loans provisions) was passed. It derives from section 160(7) of ICTA.
3670.Sub-paragraph (2) derives from section 161(7) of ICTA. It has the effect that the provisions of section 188 which apply to “stop loss” arrangements do not apply in the case of a holding of shares acquired before 6 April 1976.
Paragraph 26
3671.This paragraph deals with the change described in Change 28 in Annex 1 (using Y for the number of days in the tax year in place of 365 days). It prevents the change applying where section 183 applies in relation to section 177 (the fixed rate loan exception) in the case of loans made in a leap year and before 6 April 2003.
Paragraph 27
3672.The charge to tax under section 188 may be in respect of a loan made before 2003-04. This paragraph deals with the fact that this Act changes the terminology used to describe the beneficial loan arrangements and the charge to tax on them, so that a loan made before 2003-04 may be an employment-related loan.
Paragraph 28
3673.This paragraph, deriving from section 162(1) of ICTA makes it clear that Chapter 8 of Part 3 of this Act applies only in relation to shares acquired after 6 April 1976.
Paragraph 29
3674.This paragraph ensures continuity of the law in respect of events prior to 6 April 2003.
3675.Sub-paragraphs (2)and (3) provide the continuity of the law in the case of an acquisition of shares prior to 6 April 2003 which gave rise to a notional loan within section 162(1) of ICTA. The amount of the notional loan initially outstanding remains the amount under section 162(1) and is to be used to arrive at the amount of the notional loan outstanding at any subsequent time after 6 April 2003. in accordance with section 194(3).
3676.Sub-paragraph (4) translates the reference in section 195(3)(c) to “excluded employment” to the term “an employment to which Chapter 2 of Part 5 of ICTA applies” in the case of a notional loan which first arose before 6 April 2003.
Paragraph 30
3677.This paragraph, deriving from section 162(6) of ICTA, makes it clear that Chapter 9 of Part 3 of this Act applies only in relation to shares acquired after 6 April 1976.
Paragraph 31
3678.The charge to tax under section 199 of this Act may be in respect of a loan made before the tax year 2003-04. This paragraph translates the reference in section 199(4)(b) to “excluded employment” to the term “an employment to which Chapter 2 of Part 5 of ICTA applies” in the case where the shares were acquired before 6 April 2003.
Paragraph 32
3679.Sub-paragraph (2) makes sure that the reference in section 206 of this Act to the cost of a benefit includes the cost of any benefit determined under section 156(5) of ICTA.
3680.Sub-paragraph (3) prevents the provisions by which the cash equivalent of the benefit of certain scholarships is chargeable to tax as earnings from applying to scholarships awarded before section 165 of ICTA came into effect in 1983.
Part 4: Employment income: exemptions
Paragraphs 33 and 34
3681.These paragraphs ensure that the overall exemption limit in section 241 operates correctly in respect of a qualifying period of absence which straddles 6 April 2003.
Paragraph 35
3682.This paragraph ensures that amounts in respect of benefits provided or expenses incurred before 6 April 2003 in connection with an employee’s change of residence count towards the £8,000 limit on such amounts in tax years beginning on or after that date.
Paragraph 36
3683.This paragraph preserves the effectiveness of any direction that was made before 6 April 2003 as to what is the “relevant day”. That direction remains effective for determining what will be the “limitation day” for the purposes of this Act. The paragraph thereby also deals with the change in terminology between the source legislation and this Act.
Paragraph 37
3684.This paragraph preserves the recovery of tax and information powers of section 588(5) to (7) of ICTA, as the section applies before the date on which this Act comes into force, for cases where:
the employee’s or the employer’s liability to tax for a year has been determined in accordance with sections 588 and 589 as those sections apply before that date, and
the failure referred to in section 588(5)(a) and (b), as that section apply before that date, occurs on or after that date.
3685.The paragraph works by disregarding in such circumstances the amendment of section 588(6), and the repeal of sections 588(5)(a) and 589(3) and (4), in Schedules 6 (consequential amendments) and 8 (repeals and revocations) respectively.
Paragraph 38
3686.This paragraph ensures that awards made under ESC A57 are taken into account in calculating the “permitted maximum” under section 322(3), where a financial benefit award under section 321is made for the same suggestion.
Part 5: Employment income: deductions
Paragraph 39
3687.Section 353 provides that a deduction is allowed from earnings charged on remittance where (among other matters) certain expenses are paid in the tax year or in an earlier tax year in which the employee has been resident in the United Kingdom. This paragraph contains provisions designed to ensure continuity where the earlier tax year ended before 6 April 2003, but the deductions fall to be allowed in the tax year 2003-04 or in a later tax year.
Paragraph 40
3688.Sections 373 and 374 provide, in certain circumstances, for deductions from earnings for travel costs and expenses of a non-domiciled employee or of members of his family. The travel in question must end on, or during the period of five years beginning with a date that is a “qualifying arrival date” in relation to the employee. This paragraph contains provisions to ensure that the deductions may be given where the qualifying arrival date was before 6 April 2003, but the costs and expenses of the travel relate to the tax year 2003-04 or to a later tax year.
Part 6: Employment income: income which is not earnings or share-related
Paragraph 41
3689.This paragraph applies to benefits provided by non-approved retirement benefits schemes that were entered into before 1 December 1993 and have not been varied since so as to affect the benefits provided. It derives from the original version of section 596A of ICTA introduced by paragraphs 1, 9 and 18(7) of Schedule 6 to FA 1989.
3690.Section 596A of ICTA was subject to major changes introduced by section 108 FA 1994. Those changes are reflected in the rewrite of section 596A in Chapter 2 of Part 6 of this Act. But the changes do not apply to schemes that existed at 1 December 1993 unless the scheme has been varied with a view to changing the benefits provided. Unaltered pre-December 1993 schemes continue to be taxed by the old rules.
3691.Sub-paragraph (1) gives the conditions for the paragraph to apply.
3692.Sub-paragraph (2) disapplies section 393(2). That subsection provides that the charge in Chapter 2 of Part 6 of this Act does not apply to pension income. This rule does not appear in the original section 596A of ICTA. In practice there would not be a double charge. If a non-approved retirement benefits scheme paid a pension it would be taxed as a pension. It is more likely that the scheme would provide a lump sum that the recipient would use to buy an annuity that would be taxed under Schedule D Case III.
3693.Sub-paragraph (3) disapplies section 394(5). That subsection provides that the charge in Chapter 2 of Part 6 of this Act takes priority over any other charge in the Act. That rule does not appear in the original section 596A of ICTA.
3694.Sub-paragraph (4) provides two sections to be substituted for sections 395, 396 and 397 in Chapter 2 of Part 6 of this Act.
3695.Section 394A derives from subsections (8) and (9) of the original version of section 596A of ICTA. Tax is not charged on any lump sum financed by contributions paid by the employer provided that the employee has been taxed on those contributions. The difference between this provision and section 396 is that under the original version of section 596A of ICTA there is no requirement for the scheme income and gains to be brought into charge to tax.
3696.Section 394B derives from subsections (6) and (7) of the original version of section 596A of ICTA. In the original version of section 596A those subsections deal with a benefit that is also an amount taxed by paragraph 1 of the charge to income tax under Schedule E in section 19(1) of ICTA. Subsection (6) provides that the paragraph 1 charge takes priority. But if the charge under section 596A is greater than the charge as an emolument the additional amount is charged under section 596A.
3697.The new section 394B preserves this effect by comparing the charge under Chapter 2 of Part 6 of this Act with the charge on general earnings.
Paragraph 42
3698.This paragraph ensures that any payments or benefits which were charged under section 148 of ICTA as it was before the changes made in section 58(4) of FA 1998 are not chargeable by virtue of Chapter 3 of Part 6 if the payments continue to be made or the benefits provided after 6 April 2003.
Paragraph 43
3699.This paragraph ensures that the balance of the £30,000 threshold remaining at 5 April 2003 is carried forward to the tax year 2003-04, or, if it has all been used, nothing more is available.
Part 7: Employment income: share-related income
Paragraph 44
3700.This paragraph reflects the fact that when inserting sections 140A to 140C into ICTA, section 50(4) of FA 1998 provided that those sections should only have effect for interests acquired after 16 March 1998.
Paragraph 45
3701.This paragraph adapts section 425(1) of this Act so that it makes sense in relation to times before 6 April 2003. In relation to those times the office or employment in question must be one in respect of which the person is chargeable to tax under Case 1 of Schedule E. This is the same requirement as under section 140H(3) of ICTA.
Paragraph 46
3702.This paragraph ensures that, in computing the amount of the charge under section 428, the amounts which would have been deducted under section 140A(7) of ICTA in respect of charges arising before 6 April 2003 are still allowed.
Paragraph 47
3703.This paragraph provides that the time limit in section 140G of ICTA requiring information about the provision of conditional interests in shares during the tax year 2002-03 to be notified within 30 days of the end of that year of assessment still applies. The extended time limit in section 432 comes into force in respect of conditional interests provided after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in ICTA.
Paragraph 48
3704.This paragraph provides that the time limit in section 140G of ICTA requiring information about potential charges under section 140A of ICTA during the tax year 2002-03 to be notified within 30 days of the end of that year of assessment still applies. The extended time limit in section 433 comes into force in respect of events occurring after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in ICTA.
Paragraph 49
3705.This paragraph reflects the fact that, when inserting sections 140D to 140F into ICTA, section 51(3) of FA 1998 provided that those sections should only have effect in relation to shares acquired after 16 March 1998.
Paragraph 50
3706.This paragraph adapts section 437(1) of the Act so that it makes sense in relation to times before 6 April 2003. In relation to those times the office or employment in question must be one in respect of which the person is chargeable to tax under Case 1 of Schedule E. This is the same requirement as under section 140H(3) of ICTA.
Paragraph 51
3707.This paragraph ensures that, in computing the amount of the charge under section 439, the amounts which would have been deducted under section 140D(6) of ICTA in respect of charges arising before 6 April 2003 are still allowed.
Paragraph 52
3708.This paragraph ensures that the rules specifying what are deductible amounts in section 439 operate correctly where there have been a series of conversions at least one of which occurred before 6 April 2003.
Paragraph 53
3709.This paragraph provides that the time limit in section 140G of ICTA requiring information about potential charges under section 140D of ICTA during the tax year 2002-03 to be notified within 30 days of the end of that year of assessment still applies. The extended time limit in section 445 comes into force in respect of conversions taking place after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in ICTA.
Paragraphs 54 to 56
3710.Paragraph 54 derives from section 77 of FA 1988 which specifies that Chapter 2 of Part 3 of FA 1988 applies to acquisitions of shares, or interests in shares on or after 26 October 1987. There are variations in that general commencement provision and these are rewritten in paragraphs 55 and 56.
Paragraph 57
3711.This paragraph provides that the similar legislation in ICTA to that rewritten in Chapter 4 of Part 7 continues to apply to acquisitions before 26 October 1987.
Paragraph 58
3712.This paragraph ensures that the condition in section 77(2) of FA 1988, which requires earnings from the employment in respect of which the shares are issued to be within Case I of Schedule E, still applies to acquisitions before 6 April 2003. It also reflects the fact that the exemption from this Chapter for certain priority share allocations only applies from 16 January 1991 (by virtue of section 77(4) of FA 1988 which was inserted by section 44 of FA 1991).
Paragraph 59
3713.This paragraph ensures that, in computing the amount of the charge under section 455, the amounts which would have deducted under section 79(6A) and (6B) of FA 1988 in respect of charges arising under section 140A or section 140D of ICTA before 6 April 2003 are still allowed.
Paragraph 60
3714.This paragraph provides that the time limit in section 85(1) of FA 1988 requiring information about acquisitions during the tax year 2002-03 to be notified within 92 days of the end of that year of assessment still applies. It has been rewritten here as “before 7th July 2003”. The paragraph also makes it clear that notification is not now required if it has already been given under any of the specified shares provisions in FA 1988 or in ICTA.
Paragraph 61
3715.This paragraph provides that the time limit in section 85(2) of FA 1988 requiring information about chargeable events and chargeable benefits in the 60-day period prior to 6 April 2003 to be notified within 60 days still applies. The extended time limit in section 466 comes into force in respect of chargeable events occurring and chargeable benefits being received after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in FA 1988.
Paragraph 62
3716.This paragraph reflects the fact that the number of years referred to in section 135(2) and (5) of ICTA was changed from seven to ten by section 49 of FA 1998 in relation to share options obtained after 5 April 1998.
Paragraph 63
3717.This paragraph adapts section 473(1) of this Act so that it makes sense in relation to times before 6 April 2003. In relation to those times the office or employment in question must be one in respect of which the person is chargeable to tax under Case 1 of Schedule E. This is the same requirement as under section 140(1) of ICTA.
Paragraphs 64 to 66
3718.These three paragraphs ensure that all amounts that have been chargeable to tax on the receipt of an option before 6 April 2003 are deducted in calculating the taxable amount under section 478 of this Act or the amount of the gain under section 479 or 480 of this Act, where the option is exercised, assigned or released after that date.
Paragraph 67
3719.This paragraph ensures that section 486 of this Act applies where the matter occurred in the tax year 2002-2003 and that in such a case the particulars may be supplied to any officer of the Board of Inland Revenue, not just an inspector as required by section 136(6) of ICTA. The paragraph also makes it clear that notification is not now required if it has already been given under section 136(6) of ICTA or paragraph 2 of Schedule 14 to FA 2000.
Paragraph 68
3720.This paragraph contains provisions to ensure that an employee share ownership plan which, before 6 April 2003, was approved under Schedule 8 to FA 2000, is treated as a share incentive plan approved under Schedule 2 to this Act.
Paragraph 69
3721.This paragraph contains provisions to ensure continuity of treatment as references to an employee share ownership plan approved under Schedule 8 to FA 2000 are replaced by references to a share incentive plan approved under Schedule 2 to this Act.
Paragraph 70
3722.This paragraph provides that a jointly owned company that was a constituent company in a group scheme immediately before the enactment of FA 2002 may remain a constituent company in that group scheme, and accordingly re-enacts section 39(8) of FA 2002. Section 39(5) of FA 2002 amended the definition of a “jointly owned company” that applies for the purposes of the SIP code.
Paragraph 71
3723.This paragraph contains provisions to ensure that a savings-related share option scheme which, before 6 April 2003, was approved under Schedule 9 to ICTA is treated as an SAYE option scheme approved under Schedule 3 to this Act. This approval has effect even if the scheme does not fully meet the requirements of Schedule 3 so long as it meets the approval requirements of Schedule 9 to ICTA.
3724.Under sub-paragraph (5) the effect of the provisions of Schedule 9 to ICTA are preserved, including superseded rules, for a savings-related share option scheme approved before 6 April 2003.
3725.A savings-related share option scheme is defined in sub-paragraph (6).
Paragraph 72
3726.This paragraph ensures that, for the period before 6 April 2003, a reference to a share option granted in accordance with the provisions of an approved SAYE option scheme includes a reference to a right to acquire shares obtained in accordance with the provisions of a savings-related share option scheme.
3727.Sub-paragraph (2) reflects the removal from this Act of references to Case I of Schedule E in ICTA. Here the reference is to “earnings” in paragraph 6(2)(c) of Schedule 3 to this Act.
Paragraph 73
3728.This paragraph contains provisions to ensure that a discretionary share option scheme, which, before 6 April 2003, was approved under Schedule 9 to ICTA is treated as a CSOP scheme approved under Schedule 4 to this Act. This approval has effect even if the scheme does not fully meet the requirements of Schedule 4 so long as it meets the approval requirements of Schedule 9 to ICTA.
3729.Under sub-paragraph (5) the effect of the provisions of Schedule 9 to ICTA is preserved, including superseded rules, for a discretionary share option scheme approved before 6 April 2003.
3730.A discretionary share option scheme is defined in sub-paragraph (6).
Paragraph 74
3731.This paragraph ensures that, for the period before 6 April 2003, a reference to a share option granted in accordance with the provisions of an approved CSOP scheme includes a reference to a right to acquire shares obtained in accordance with the provisions of a discretionary share option scheme.
Paragraph 75
3732.This paragraph preserves the effect of section 114(9) of and Schedule 16 to FA 1996, in relation to a discretionary share option scheme, as defined in sub-paragraph (5), which was approved before 29 April 1996.
Paragraph 76
3733.This paragraph preserves the effect of section 115 of FA 1996 for rights obtained under a discretionary share option scheme as defined in sub-paragraph (3) in the period from 17 July 1995 to 28 April 1996.
Paragraph 77
3734.This paragraph contains provisions to ensure that where, a share option was a qualifying option for the purposes of Schedule 14 to FA 2000 immediately before 6 April 2003, the share option is treated as a qualifying option for the purposes of the EMI code. This applies even where the requirements that had to be met differ from those set out in Schedule 5.
Paragraph 78
3735.This paragraph reflects the change in approach to a disqualifying event arising in relation to the requirement as to commitment of working time. The new approach operates for the tax year 2003-04 onwards.
3736.Sub-paragraph (2) reflects the method of determining such an event in paragraph 52 (3) of Schedule 14 to FA 2000.
Paragraphs 79 and 80
3737.These paragraphs, which relate to section 536 and 537 respectively, reflect the fact that the amendments made to the EMI code by Schedule 14 to FA 2001 have effect only after the passing of that Act.
Paragraph 81
3738.This paragraph ensures that the revised wording of section 540 will work satisfactorily in connection with options granted before 6 April 2003.
Paragraph 82
3739.This paragraph reflects changes in statutory references in section 541 (effects on other income tax charges). The changes apply to the provision that sets out the relief in the calculation of a charge on conditional and convertible shares.
Paragraph 83
3740.This paragraph ensures that the new sub-paragraph 41(6) of Schedule 5 applies to replacement options whenever granted.
Paragraph 84
3741.This paragraph provides for continuity in the definition of “employee” for the purposes of Chapter 11 of Part 7 of this Act (employee benefits trusts).
Part 8: Approved profit sharing schemes
Paragraph 85
3742.This paragraph ensures that the requirement for trustees to notify a participant of the facts relating to his tax liability will have effect after 5 April 2003 in a modified form to reflect the new language introduced in this Act.
Paragraph 86
3743.This paragraph preserves the capital gains tax advantages that are available where the trustees of an approved share incentive plan acquire shares from the trustees of an approved profit sharing scheme. It is derived from paragraph 103 of Schedule 8 to FA 2000 and is not being rewritten in Schedule 2 because of the phasing out of APS schemes (see the notes relating to paragraph 26 of Schedule 6 to this Act).
Paragraph 87
3744.An individual who participates in any of the share schemes etc dealt with in Schedules 2 to 5 to this Act must not have a material interest in the company in question. This paragraph provides that, in calculating whether or not such an individual has such a material interest, the interest of the trustees of any approved profit sharing scheme in any shares in the company which have not been appropriated to an individual are to be disregarded, as are any rights exercisable by the trustees as a result of that interest. The provision made by this paragraph has been placed in this Schedule because approved profit sharing schemes are being phased out (see section 49 of FA 2000 and the notes relating to paragraph 26 of Schedule 6 to this Act).
Part 9: Social security income
Paragraph 88
3745.This paragraph has effect if, in relation to certain provisions (listed in sub-paragraph (3)), the repeals made by the Tax Credits Act 2002 have not come fully into force.
Part 10: PAYE
Paragraph 89
3746.This paragraph derives from part of section 203(10) of ICTA which provides part of the powers for PAYE regulations to deal with electronic filing. Sections 132 and 133 of FA 1999 introduced new powers to provide for use of electronic communications. As a consequence part of section 203(10) will be repealed by Schedule 20 to FA 1999 when a Treasury order is made under section 133(4) of that Act. Section 684(2), item 5, anticipates this repeal. This paragraph preserves the position until the order is made.
Part 11: Consequences for corporation tax
Paragraphs 90 to 92
3747.These paragraphs explain how this Act will have effect for the purposes of corporation tax.
3748.A company’s accounting period affected by the provisions of this Act may straddle the beginning of the tax year 2003-04. Paragraph 91 provides that in such a case, the company may elect for the law as it stood before 6 April 2003 to apply for the duration of that straddling accounting period.
3749.Most transitional provisions made by this Schedule operate by reference to 6 April 2003 (the beginning of the tax year 2003-04) which is the date on which the Act will first have effect for income tax purposes. Paragraph 91 provides that, in a case where this Act applies for a company’s accounting period that begins before 6 April 2003, those transitional provisions will instead operate by reference to the beginning of that accounting period.
3750.Paragraph 92 provides the one exception to this: the existing provisions about corporation tax deductions in relation to SIPs, SAYE option schemes and CSOPs (Part 12 of Schedule 8 to FA 2000 and section 84A of ICTA) will continue to operate until the provisions of this Act come into force on 6 April 2003, regardless of when the company’s accounting period begins.
