The Social Security (Contributions) Amendment (No. 6) Regulations 1991

Amendment of regulation 19 of the principal Regulations

3.  –

(1) Regulation 19 of the principal Regulations (payments to be disregarded in the computation of earnings) shall be amended in accordance with the following paragraphs of this regulation.

(2) In paragraph (1)(d)(1) there shall be inserted before the words “any payment in kind” the words “subject to paragraph (5) of this regulation,”; and the words “(other than a payment to which regulation 19C of these Regulations applies),” shall be omitted.

(3) Paragraph (1)(j) shall be omitted.

(4) After paragraph (1)(k)(2) there shall be added the following sub-paragraphs–

“(l) a payment by way of shares (which shall include a payment by way of or derivedfrom shares appropriated under a profit sharing scheme to which the provisionsof section 186 of the Income and Corporation Taxes Act 1988 (approved profitsharing schemes) apply) where such shares form part of the ordinary sharecapital of–

(i) the secondary contributor; or

(ii) a company which has control of that secondary contributor; or

(iii) a company which either is, or has control of, a body corporate which is a member of a consortium owning either that secondary contributor or a body corporate having control of that secondary contributor;

(m) a payment by way of an option to acquire any shares specified in sub-paragraph (1) of this paragraph;

(n) a payment by way of any benefit which by virtue of section 68(1) of the Finance Act 1988(3) (priority share allocations for directors or employees) is not treated as an emolument of the employment chargeable to tax under Schedule E.”

At the end of the regulation there shall be added the following paragraphs

“(5) Payments under paragraph (1)(d) of this regulation shall not include any payment by way of the conferment of any beneficial interest in–

(a) any asset falling within Schedule 1A to these Regulations; or

(b) any contract the effecting and carrying out of which constitutes long term business falling within Class I (life and annuity business), Class III (linked long term business) or Class VI (capital redemption business) specified in Schedule 1 to the Insurance Companies Act 1982(4).

(6) For the purposes of paragraph (5)(b) of this regulation where the provisions of a contract of insurance are such that the effecting and carrying out of the contract constitutes–

(a) both long term business within the meaning of the Insurance Companies Act 1982 and general business within the meaning of that Act; or

(b) by virtue of section 1(3) of that Act long term business notwithstanding the inclusion of subsidiary general business provisions, the effecting and carrying out of such contract shall be treated as constituting long term business.

(7) In paragraph (1)(l) of this regulation–

(a) “body corporate” includes–

(i) a body corporate constituted under the law of a country or territory outside the United Kingdom; and

(ii) an unincorporated association wherever constituted,

but does not include a partnership, a local authority within the meaning of section 842A of the Income and Corporation Taxes Act 1988(5) or a local authority association within the meaning of section 519 of that Act;

(b) a body corporate is a member of a consortium owning another body corporate if the first-mentioned body corporate is one of a number of bodies corporate which between them beneficially own not less than three-quarters of the other body corporate’s ordinary share capital and each of which beneficially owns not less than one-twentieth of that capital;

(c) “company” means any body corporate having a share capital;

(d) “control” in relation to a body corporate means the power of a person to secure–

(i) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or

(ii) by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person;

(e) “ordinary share capital” in relation to a company means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company;

(f) “shares” includes stock.”

(1)

Paragraph (1)(d) was amended by regulation 2 of S.I. 1988/860.

(2)

Paragraph (1)(k) was inserted by regulation 2 of S.I. 1988/992.

(3)

1988 c. 39. Section 68(1) was amended by the Finance Act 1989 (c. 26), section 66(1) and (2).

(4)

1982 c. 50.

(5)

Section 842A was inserted by the Finance Act 1990 (c. 29), section 127(1).