The Personal Equity Plan (Amendment) Regulations 1991

Statutory Instruments

1991 No. 733

INCOME TAX

The Personal Equity Plan (Amendment) Regulations 1991

Made

19th March 1991

Laid before the House of Commons

19th March 1991

Coming into force

6th April 1991

The Treasury, in exercise of the powers conferred on them by section333 of the Income and Corporation Taxes Act 1988(1) and section 149D of the Capital Gains Tax Act 1979(2), hereby make the following Regulations:

Citation and commencement

1.  These Regulations may be cited as the Personal Equity Plan(Amendment) Regulations 1991 and shall come into force on 6th April1991.

Interpretation

2.  In these Regulations“the principal Regulations” means the Personal Equity Plan Regulations 1989(3) and, unless the context otherwise requires,“regulation” means a regulation of those Regulations.

Amendments to the principal Regulations

3.  In regulation 2(1)(a) the definition of“the 1986 Regulations” and the semi-colon preceding it shall be omitted.

4.  In regulation 4(4)—

(a) in paragraph (1) the words“(subject to regulation 10)” shall be omitted;

(b) in paragraph (3)(a) for“30” there shall be substituted“42”.

5.  In regulation 5—

(a) for paragraph (3) there shall be substituted—

“(3) A plan investor’s cash subscription and any other cash held by aplan manager under a plan shall be held only in sterling and bedeposited in an account with a deposit-taker or a building society whichis designated for the purposes of these Regulations only.”;

(b) in paragraph (5) after the words“regulation 6(3)(b)” there shall be inserted the words“, or in paired shares,” and for the words“and investment trusts” there shall be substituted the words“, investment trusts and paired shares”.

6.   In regulation 6—

(a) in paragraph (2)(5) after sub-paragraph (b) there shall be inserted—

“(ba) subject to the condition specified in paragraph (3)(a),investments in units comprising shares issued by a body corporateincorporated in the United Kingdom which are paired with shares issuedby a body corporate which is not so incorporated (“paired shares”);”.

(b) in paragraph (3)(a)(6) for the words“and investment trusts” there shall be substituted the words“, investment trusts and paired shares”;

(c) in paragraph (4)(7) for“£900” there shall be substituted the words“one quarter of the subscription limit”.

(d) after paragraph (4) there shall be added—

“(5) For the purposes of this regulation, shares issued by a bodycorporate incorporated in the United Kingdom (“the UK company”) are paired with shares in a body corporate which is not soincorporated (“the foreign company”) where—

(a) the articles of association of the UK company and the equivalentinstruments governing the foreign company each provide that no share inthe company to which they relate may be transferred otherwise than aspart of a unit comprising one share in that company and one share in theother; and

(b) such units have been offered for sale to the public in the UnitedKingdom and, at the same time, other such units have been offered forsale to the public at a broadly equivalent price in the country in whichthe foreign company is incorporated.”

7.  In regulation 6A(8)—

(a) in paragraph (1) for the words“in accordance with the condition in paragraph (2)(b)” there shall be substituted the words“with the proceeds of sale of those investments”;

(b) for paragraph (2)(b)(8) there shall be substituted—

“(b) that the total amount of the cash subscription to the plan forthe year ending 5th April 1991 which was invested in non-qualifyinginvestments on that date did not exceed £900;

(c) that the total amount of the cash subscription to the plan investedin authorised unit trusts, funds of funds and investment trusts in anyyear beginning after 5th April 1991 does not exceed one quarter of thesubscription limit.”

8.  In regulation 7(2)(b) the words“(subject to regulation 10)” shall be omitted.

9.  Regulation 10 shall be omitted.

10.—(1) Regulation 17 shall be renumbered as paragraph (1) of thatregulation.

(2) In regulation 17—

(a) in paragraph (1) the words from“, except interest” to“for his benefit” shall be omitted.

(b) after paragraph (1) there shall be added—

“(2) Interest on a cash deposit which is a plan investment—

(a) where the cash is deposited in an account with a deposit-taker,shall be paid or credited gross and the deposit shall not be treated asa relevant deposit within the meaning of section 481(4) of the Incomeand Corporation Taxes Act 1988(9), and

(b) where the cash is deposited in an account with a building society,shall be treated as a gross payment to which regulation 4 of the IncomeTax (Building Societies) (Dividends and Interest) Regulations 1990(10) applies.”

11.   After regulation 17 there shall be inserted—

“Interest on cash deposits paid to plan investor

17A.— (1) When in any year an amount of interest paid or creditedin respect of a cash deposit which is a plan investment—

(a) is paid by the plan manager to or at the direction of the planinvestor or otherwise applied for his benefit, and

(b) the aggregate of that amount and of all other amounts so paid in theyear exceeds £180,

paragraph (2) shall apply.

(2) Where this paragraph applies—

(a) the plan manager shall pay to the Board a sum representing incometax at the basic rate in force for the year on—

(i) all amounts paid in that year before this paragraph first applies,and

(ii) the amount referred to in paragraph (1) and each further amount paidin that year;

(b) any sum so payable shall be treated as an amount of tax due under anassessment which is final and conclusive and payable, in the case of thesum payable in respect of the amounts referred to in sub-paragraph(a)(i), not later than 30 days after the date on which this paragraphfirst applies in any year and, in any other case, not later than 30 daysafter payment of the amount referred to in paragraph (1);

(c) the interest referred to in paragraph (1) shall be treated in allother respectsas interest of money within the meaning of paragraph (a)of Case III ofSchedule D in section 18(3) of the Taxes Act andchargeable to tax under that Case for the year in which it arises.

(3) The reference to interest in paragraph (1) includes a reference toany bonus and to a dividend paid or credited in respect of a shareaccount with a building society.”

12.  In regulation 18(3) after paragraph (a) there shall beinserted—

“(aa) any sum representing income tax which is payable underregulation 17A on amounts of interest paid or credited gross and paid bythe plan manager to or at the direction of the plan investor orotherwise applied for his benefit;”.

Greg Knight

Nicholas Baker

Two of the Lords Commissioners of Her Majesty’s Treasury

19th March 1991

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which come into force on 6th April 1991, furtheramend the Personal Equity Plan Regulations 1989 (“the principal Regulations”). The principal effects of the Regulations are to remove therequirement that cash held by a plan manager in an account with adeposit-taker or building society be held in circumstances where, in thecase of an account with a deposit-taker, the deposit-taker is liable toaccount for composite rate tax on interest payments or, in the case ofan account with a building society, the reduced rate amount payable bythe society includes an amount calculated by applying the reduced rateto interest payments; to authorise the holding of paired shares as planinvestments subject to the same restrictions as apply to unit trusts,funds of funds and investment trusts; to increase the amount that may beinvested in authorised unit trusts, funds of funds and investment trustswhich do not satisfy the requirements of regulation 6 of the principalRegulations to £1,500; and to remove the relaxation of thesubscription conditions in relation to rights issues.

The requirements as to the holding of cash deposits is replacedby provisions that interest on a cash deposit which is a plan investmentis to be paid gross and that, if the plan manager makes payments ofinterest in excess of£180 in any year to or at the direction of the plan investor, heis to deduct, and account to the Commissioners of Inland Revenue (“the Board”) for, income tax at the basic rate on the amount of all suchpayments in the year.

The Regulations also make a number of minor amendments andcorrections to the drafting of the principal Regulations.

Regulation 1 provides for citation and commencement.

Regulation 2 contains definitions.

Regulation 3 omits a redundant definition from regulation 2(1)(a) ofthe principal Regulations.

Regulation 4 amends regulation 4 of the principal Regulations byextending the time within which shares allotted or allocated following apublic offer are to be transferred to a plan from 30 to 42 days.

Regulation 5 amends the requirements in regulation 5(3) of theprincipal Regulations which are to be satisfied when a plan managerholds cash in an account with a deposit-taker or building society.

Regulation 6 adds units comprising paired shares to the list ofqualifying investments in regulation 6 of the principal Regulationssubject to the condition referred to above and increases the amountwhich may be invested in authorised unit trusts, funds of funds andinvestment trusts which do not satisfy the requirements of thatregulation to £1,500.

Regulation 7 amends regulation 6A(2) and adds a further ruleapplying after 5th April 1991 to plans in which non-qualifyinginvestments were held on 5th April 1990.

Regulation 8 makes an amendment to regulation 7 of the principalRegulations which is consequent on regulation 9.

Regulation 9 omits regulation 10 of the principal Regulations.

Regulation 10 amends regulation 17 of the principal Regulations andprovides that interest paid on a cash deposit with a deposit-taker orbuilding society which is a plan investment is to be paid gross.

Regulation 11 inserts a new regulation 17A in the principalRegulations the effect of which is that, where a plan manager paysinterest received by him on a cash deposit which is a plan investment toor at the direction of the plan investor, and the aggregate of suchpayments in any year exceeds £180, he is to account to the Boardfor basic rate tax on all such payments in the year.

Regulation 12 makes an amendment to regulation 18(3) of theprincipal Regulations which is consequent on the new regulation 17A.

(1)

1988 c. 1.

(2)

1979 c. 14;section 149D was inserted by paragraph 26 ofSchedule 29 to the Income and Corporation Taxes Act 1988 and amendedby section 116 of the Finance Act 1988 (c. 39).

(3)

S.I. 1989/469; amended by S.I. 1990/678

(4)

Amended by S.I. 1990/678

(5)

Amended by S.I. 1990/678

(6)

Amended by S.I. 1990/678

(7)

Added by S.I. 1990/678.

(8)

Inserted by S.I. 1990/678.

(9)

Section 481 was amended by paragraph 8 of Schedule 5to the Finance Act 1990 (c. 29).

(10)

S.I. 1990/2231.