Part 7: Employment income: share-related income
3700.This paragraph reflects the fact that when inserting sections 140A to 140C into ICTA, section 50(4) of FA 1998 provided that those sections should only have effect for interests acquired after 16 March 1998.
3701.This paragraph adapts section 425(1) of this Act so that it makes sense in relation to times before 6 April 2003. In relation to those times the office or employment in question must be one in respect of which the person is chargeable to tax under Case 1 of Schedule E. This is the same requirement as under section 140H(3) of ICTA.
3702.This paragraph ensures that, in computing the amount of the charge under section 428, the amounts which would have been deducted under section 140A(7) of ICTA in respect of charges arising before 6 April 2003 are still allowed.
3703.This paragraph provides that the time limit in section 140G of ICTA requiring information about the provision of conditional interests in shares during the tax year 2002-03 to be notified within 30 days of the end of that year of assessment still applies. The extended time limit in section 432 comes into force in respect of conditional interests provided after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in ICTA.
3704.This paragraph provides that the time limit in section 140G of ICTA requiring information about potential charges under section 140A of ICTA during the tax year 2002-03 to be notified within 30 days of the end of that year of assessment still applies. The extended time limit in section 433 comes into force in respect of events occurring after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in ICTA.
3705.This paragraph reflects the fact that, when inserting sections 140D to 140F into ICTA, section 51(3) of FA 1998 provided that those sections should only have effect in relation to shares acquired after 16 March 1998.
3706.This paragraph adapts section 437(1) of the Act so that it makes sense in relation to times before 6 April 2003. In relation to those times the office or employment in question must be one in respect of which the person is chargeable to tax under Case 1 of Schedule E. This is the same requirement as under section 140H(3) of ICTA.
3707.This paragraph ensures that, in computing the amount of the charge under section 439, the amounts which would have been deducted under section 140D(6) of ICTA in respect of charges arising before 6 April 2003 are still allowed.
3708.This paragraph ensures that the rules specifying what are deductible amounts in section 439 operate correctly where there have been a series of conversions at least one of which occurred before 6 April 2003.
3709.This paragraph provides that the time limit in section 140G of ICTA requiring information about potential charges under section 140D of ICTA during the tax year 2002-03 to be notified within 30 days of the end of that year of assessment still applies. The extended time limit in section 445 comes into force in respect of conversions taking place after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in ICTA.
Paragraphs 54 to 56
3710.Paragraph 54 derives from section 77 of FA 1988 which specifies that Chapter 2 of Part 3 of FA 1988 applies to acquisitions of shares, or interests in shares on or after 26 October 1987. There are variations in that general commencement provision and these are rewritten in paragraphs 55 and 56.
3711.This paragraph provides that the similar legislation in ICTA to that rewritten in Chapter 4 of Part 7 continues to apply to acquisitions before 26 October 1987.
3712.This paragraph ensures that the condition in section 77(2) of FA 1988, which requires earnings from the employment in respect of which the shares are issued to be within Case I of Schedule E, still applies to acquisitions before 6 April 2003. It also reflects the fact that the exemption from this Chapter for certain priority share allocations only applies from 16 January 1991 (by virtue of section 77(4) of FA 1988 which was inserted by section 44 of FA 1991).
3713.This paragraph ensures that, in computing the amount of the charge under section 455, the amounts which would have deducted under section 79(6A) and (6B) of FA 1988 in respect of charges arising under section 140A or section 140D of ICTA before 6 April 2003 are still allowed.
3714.This paragraph provides that the time limit in section 85(1) of FA 1988 requiring information about acquisitions during the tax year 2002-03 to be notified within 92 days of the end of that year of assessment still applies. It has been rewritten here as "before 7th July 2003". The paragraph also makes it clear that notification is not now required if it has already been given under any of the specified shares provisions in FA 1988 or in ICTA.
3715.This paragraph provides that the time limit in section 85(2) of FA 1988 requiring information about chargeable events and chargeable benefits in the 60-day period prior to 6 April 2003 to be notified within 60 days still applies. The extended time limit in section 466 comes into force in respect of chargeable events occurring and chargeable benefits being received after 5 April 2003. The paragraph also makes it clear that notification is not now required if it has already been given under the corresponding provision in FA 1988.
3716.This paragraph reflects the fact that the number of years referred to in section 135(2) and (5) of ICTA was changed from seven to ten by section 49 of FA 1998 in relation to share options obtained after 5 April 1998.
3717.This paragraph adapts section 473(1) of this Act so that it makes sense in relation to times before 6 April 2003. In relation to those times the office or employment in question must be one in respect of which the person is chargeable to tax under Case 1 of Schedule E. This is the same requirement as under section 140(1) of ICTA.
3718.These three paragraphs ensure that all amounts that have been chargeable to tax on the receipt of an option before 6 April 2003 are deducted in calculating the taxable amount under section 478 of this Act or the amount of the gain under section 479 or 480 of this Act, where the option is exercised, assigned or released after that date.
3719.This paragraph ensures that section 486 of this Act applies where the matter occurred in the tax year 2002-2003 and that in such a case the particulars may be supplied to any officer of the Board of Inland Revenue, not just an inspector as required by section 136(6) of ICTA. The paragraph also makes it clear that notification is not now required if it has already been given under section 136(6) of ICTA or paragraph 2 of Schedule 14 to FA 2000.
3720.This paragraph contains provisions to ensure that an employee share ownership plan which, before 6 April 2003, was approved under Schedule 8 to FA 2000, is treated as a share incentive plan approved under Schedule 2 to this Act.
3721.This paragraph contains provisions to ensure continuity of treatment as references to an employee share ownership plan approved under Schedule 8 to FA 2000 are replaced by references to a share incentive plan approved under Schedule 2 to this Act.
3722.This paragraph provides that a jointly owned company that was a constituent company in a group scheme immediately before the enactment of FA 2002 may remain a constituent company in that group scheme, and accordingly re-enacts section 39(8) of FA 2002. Section 39(5) of FA 2002 amended the definition of a "jointly owned company" that applies for the purposes of the SIP code.
3723.This paragraph contains provisions to ensure that a savings-related share option scheme which, before 6 April 2003, was approved under Schedule 9 to ICTA is treated as an SAYE option scheme approved under Schedule 3 to this Act. This approval has effect even if the scheme does not fully meet the requirements of Schedule 3 so long as it meets the approval requirements of Schedule 9 to ICTA.
3724.Under sub-paragraph (5) the effect of the provisions of Schedule 9 to ICTA are preserved, including superseded rules, for a savings-related share option scheme approved before 6 April 2003.
3725.A savings-related share option scheme is defined in sub-paragraph (6).
3726.This paragraph ensures that, for the period before 6 April 2003, a reference to a share option granted in accordance with the provisions of an approved SAYE option scheme includes a reference to a right to acquire shares obtained in accordance with the provisions of a savings-related share option scheme.
3727.Sub-paragraph (2) reflects the removal from this Act of references to Case I of Schedule E in ICTA. Here the reference is to "earnings" in paragraph 6(2)(c) of Schedule 3 to this Act.
3728.This paragraph contains provisions to ensure that a discretionary share option scheme, which, before 6 April 2003, was approved under Schedule 9 to ICTA is treated as a CSOP scheme approved under Schedule 4 to this Act. This approval has effect even if the scheme does not fully meet the requirements of Schedule 4 so long as it meets the approval requirements of Schedule 9 to ICTA.
3729.Under sub-paragraph (5) the effect of the provisions of Schedule 9 to ICTA is preserved, including superseded rules, for a discretionary share option scheme approved before 6 April 2003.
3730.A discretionary share option scheme is defined in sub-paragraph (6).
3731.This paragraph ensures that, for the period before 6 April 2003, a reference to a share option granted in accordance with the provisions of an approved CSOP scheme includes a reference to a right to acquire shares obtained in accordance with the provisions of a discretionary share option scheme.
3732.This paragraph preserves the effect of section 114(9) of and Schedule 16 to FA 1996, in relation to a discretionary share option scheme, as defined in sub-paragraph (5), which was approved before 29 April 1996.
3733.This paragraph preserves the effect of section 115 of FA 1996 for rights obtained under a discretionary share option scheme as defined in sub-paragraph (3) in the period from 17 July 1995 to 28 April 1996.
3734.This paragraph contains provisions to ensure that where, a share option was a qualifying option for the purposes of Schedule 14 to FA 2000 immediately before 6 April 2003, the share option is treated as a qualifying option for the purposes of the EMI code. This applies even where the requirements that had to be met differ from those set out in Schedule 5.
3735.This paragraph reflects the change in approach to a disqualifying event arising in relation to the requirement as to commitment of working time. The new approach operates for the tax year 2003-04 onwards.
3736.Sub-paragraph (2) reflects the method of determining such an event in paragraph 52 (3) of Schedule 14 to FA 2000.
Paragraphs 79 and 80
3737.These paragraphs, which relate to section 536 and 537 respectively, reflect the fact that the amendments made to the EMI code by Schedule 14 to FA 2001 have effect only after the passing of that Act.
3738.This paragraph ensures that the revised wording of section 540 will work satisfactorily in connection with options granted before 6 April 2003.
3739.This paragraph reflects changes in statutory references in section 541 (effects on other income tax charges). The changes apply to the provision that sets out the relief in the calculation of a charge on conditional and convertible shares.
3740.This paragraph ensures that the new sub-paragraph 41(6) of Schedule 5 applies to replacement options whenever granted.
3741.This paragraph provides for continuity in the definition of "employee" for the purposes of Chapter 11 of Part 7 of this Act (employee benefits trusts).