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Income Tax (Earnings and Pensions) Act 2003

Section 506: Charge on partnership shares ceasing to be subject to plan

2063.This section is the second of three that impose tax charges connected with shares ceasing to be subject to SIPs. This section is the main charging provision for partnership shares; and, as in the case of section 505, it provides for the charge to vary with the length of the period for which the shares have been held. If the shares have been held for more than five years, then once again there is no income tax liability under this section.

2064.This section derives from sub-paragraphs (1) to (5) of paragraph 86 of Schedule 8 to FA 2000.

2065.Subsection (1) introduces a new term, “the exit date”. This term is then deployed in subsections (2) to (5).

2066.As in the case of other sections in this Chapter, the year that is “the relevant tax year” is specified. The point at which the tax charge arises is not specified in Schedule 8 to FA 2000; but as there can be little doubt about the answer, the point has been dealt with explicitly in subsection (5). See Note 3(B) in Annex 2.

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