Income Tax (Earnings and Pensions) Act 2003

Introduction E+W+S+N.I.

447 Application of this Chapter E+W+S+N.I.

(1) This Chapter applies where a person (“the employee”)—

(a) acquires shares or an interest in shares in a company, and

(b) does so as a director or employee of that or another company.

(2) In this Chapter (unless the context indicates a different meaning)—

• “the acquisition” means the acquisition of shares or an interest in shares mentioned in subsection (1)(a);

• “the shares” means the shares mentioned there;

• and “director” and “employee” have the extended meaning given by section 470(1).

(3) The company as a director or employee of which the employee acquires the shares or the interest in them is “the employer company” for the purposes of this Chapter.

(4) For the purposes of this Chapter a person (“E”) acquires shares or an interest in shares “as a director or employee” of a company if E acquires the shares or interest in pursuance of—

(a) a right conferred on, or an opportunity offered to, E by reason of E’s office as a director of, or E’s employment by, the company; or

(b) a right assigned to E after having been conferred on some other person by reason of E’s office as a director of, or E’s employment by, the company.

(5) In addition, if a person (“A”) acquires shares or an interest in shares in a company in pursuance of a right conferred on, or opportunity offered to, A as a person connected with a director or employee of that or another company (“the company”), the director or employee is to be treated for the purposes of this Chapter—

(a) as acquiring the shares or interest “as a director or employee” of the company, and

(b) as holding any beneficial interest in the shares for the time being held by A;

and subsections (1) to (3) apply accordingly.

(6) Section 463 provides for a person to be treated as continuing to have a beneficial interest in shares until there is a qualifying disposal for the purposes of that section.

448 Cases where this Chapter does not apply E+W+S+N.I.

(1) This Chapter does not apply where a person has acquired shares or an interest in shares as a director or employee of a company if the earnings from the office or employment in question were not (or would not have been if there had been any) general earnings to which section 15 or 21 applies (earnings for year when employee resident and ordinarily resident in the UK).

(2) This Chapter does not apply where a person has acquired shares or an interest in shares under the terms of an offer to the public.

(3) In a case within section 544(1) (exemption for priority share allocations where offer to employees separate from public offer), any acquisition made under the terms of either the public offer or the employee offer within the meaning of that section is to be treated for the purposes of this Chapter as made under the terms of an offer to the public.

(4) Subsection (3) applies whether or not there is any benefit within section 544(2) (benefit derived from entitlement to priority allocation exempt from income tax).