Finance Act 2000

Part I Reduction of applicable periods

Meaning of “eligible shares”

1 In section 289 of the Taxes Act 1988 (eligibility for relief), in subsection (7) (definition of “eligible shares”) for the words “the period of five years beginning with the date on which they are issued,” substitute “the period—

(a) beginning with the issue of the shares, and

(b) ending immediately before the termination date relating to those shares,”.

Conditions relating to individuals

2 In section 291 of the Taxes Act 1988 (individuals qualifying for relief)—

(a) in subsection (1)(b) for “seven year” substitute “designated”, and

(b) for subsection (6) (definition of “the seven year period”) substitute—

“(6) In this Chapter “the designated period”, in relation to any eligible shares issued by a company, means the period—

(a) beginning two years before the issue of the shares, and

(b) ending immediately before the termination date relating to those shares.”.

Conditions relating to further investment by connected person

3 (1) Section 291A of the Taxes Act 1988 (connected persons: directors) is amended as follows.

(2) In subsection (1)(a) for “seven year” substitute “designated”.

(3) In subsection (5)(c) (period during which connected person can make a further investment attracting relief)—

(a) for “of five years” substitute “(i)”, and

(b) after “paragraph,” insert “and

(ii) ending immediately before the termination date relating to those eligible shares,”.

Value received from company

4 In section 300(1) of the Taxes Act 1988 (period during which receipt of value by investor may trigger charge) for “seven year” substitute “designated”.

Value received by persons other than claimants

5 (1) Section 303 of the Taxes Act 1988 (value received by persons other than claimants) is amended as follows.

(2) In subsection (1) for “seven year” substitute “designated”.

(3) In subsection (2) for “the seven year periods” substitute “the applicable periods”.

(4) After that subsection insert—

“(2A) For the purposes of subsection (2) above “the applicable period” for an issue of eligible shares is—

(a) if the shares were issued before 6th April 2000, the period beginning two years before the issue of the shares and ending immediately before the fifth anniversary of the issue date,

(b) in any other case, the designated period for the issue.”.

(5) In subsection (3) for “seven year” substitute “designated”.

Meaning of “termination date” and “relevant period”

6 (1) Section 312 of the Taxes Act 1988 (interpretation of Chapter III) is amended as follows.

(2) In subsection (1) after the definition of “debenture” insert—

““the designated period” has the meaning given by section 291(6);”.

(3) In that subsection, for “and” at the end of the definition of “51 per cent subsidiary” substitute—

““termination date” in relation to any eligible shares issued by a company, means the third anniversary of the issue date or if—

(a) the shares were issued wholly or mainly in order to raise money for the purpose of a qualifying business activity falling within section 289(2)(a) (company meeting trading activities requirement by reason of the company or a subsidiary carrying on or preparing to carry on a qualifying trade), and

(b) the company or subsidiary concerned had not begun to carry on the trade in question on the issue date,

the third anniversary of the date on which it begins to carry on that trade; and”.

(4) For subsection (1A) (definition of “relevant period”) substitute—

“(1A) In any provision of this Chapter “relevant period”, in relation to any eligible shares issued by a company, means whichever of the following periods is applied for the purposes of that provision—

(a) the period beginning either—

(i) with the incorporation of the company, or

(ii) if the company was incorporated more than two years before the date on which the shares were issued, two years before that date,

and ending immediately before the termination date relating to the shares, and

(b) the period beginning with the issue of the shares and ending immediately before the termination date relating to them.”.

Postponement of chargeable gains on reinvestment

7 (1) Schedule 5B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (enterprise investment scheme: reinvestment) is amended as follows.

(2) In paragraph 19(1), after the definition of “associate” insert—

““the designated period”, in the case of any shares, means the period found by applying section 291(6) of that Act by reference to the company that issued the shares and by reference to the shares;”.

(3) In the following provisions for “five year” substitute “designated”—

• paragraph 3(1)(c) and (d) (chargeable events);

• paragraph 16(1)(a) (information).

(4) In the following provisions for “seven year” substitute “designated”—

• paragraph 13(1) (period during which receipt of value by investor may trigger charge);

• paragraph 14(1) (period during which value received by other persons may trigger charge).

Commencement

8 The amendments in this Part of this Schedule have effect in relation to shares issued on or after 6th April 2000.