(1) The Treasury may by regulations amend the listed provisions by substituting, for the amount for the time being mentioned in those provisions, a different amount.
(2) The listed provisions are—
subsections (1), (4) and (5) of section 403, and
subsections (1), (4) and (5) of section 404 and its heading.
(3) Regulations under this section may include transitional provision.
(4) A statutory instrument containing regulations under this section which reduce the mentioned amount may not be made unless a draft of it has been laid before, and approved by a resolution of, the House of Commons.
405 Exception for certain payments exempted when received as earnings
(1) This Chapter does not apply to any payment received in connection with the termination of a person’s employment which, were it received for the performance of the duties of the employment, would fall within section 308 (exemption of contributions to approved personal pension arrangements).
(2) This Chapter does not apply to any payment received in connection with any change in the duties of, or earnings from, a person’s employment to the extent that, were it received for the performance of the duties of the employment, it would fall within section 271(1) (limited exemption of removal benefits and expenses).
406 Exception for death or disability payments and benefits
(1) This Chapter does not apply to a payment or other benefit provided—
(a) in connection with the termination of employment by the death of an employee, or
(b) on account of injury to, or disability of, an employee.
(2) Although “injury” in subsection (1) includes psychiatric injury, it does not include injured feelings.
407 Exception for payments and benefits under tax-exempt pension schemes
(1) This Chapter does not apply to a payment or other benefit provided under a tax-exempt pension scheme if—
(a) the payment or other benefit is by way of compensation—
(i) for loss of employment, or
(ii) for loss or diminution of earnings, and
the loss or diminution is due to ill-health, or
(b) the payment or other benefit is properly regarded as earned by past service.
(2) For this purpose “tax-exempt pension scheme” means—
(a) a registered pension scheme,
(aa) a scheme set up by a government outside the United Kingdom for the benefit of employees or primarily for their benefit, or
(b) any such scheme or fund as was described in section 221(1) and (2) of ICTA 1970 (schemes to which payments could be made without charge to tax under section 220 of ICTA 1970).
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
408 Exception for contributions to registered pension schemes
(1) This Chapter does not apply to a contribution to a registered pension scheme or an employer-financed retirement benefit scheme if the contribution is made—
(a) as part of an arrangement relating to the termination of a person’s employment, and
(b) in order to provide benefits for the person in accordance with the terms of the scheme or approved personal pension arrangements.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
409 Exception for payments and benefits in respect of certain legal expenses etc and indemnity insurance
(1) This Chapter does not apply to a payment or other benefit received by an individual if or to the extent that—
(a) in the case of a cash benefit, it is provided for meeting the cost of a deductible amount, or
(b) in the case of a non-cash benefit, it is or represents a benefit equivalent to the cost of paying a deductible amount.
(2) For the purposes of this section “deductible amount” means an amount which meets conditions A to C.
(3) Condition A is that the amount is paid by the individual or by the employer or former employer on behalf of the individual.
(4) Condition B is that a deduction for the amount would have been allowed under section 346 from earnings from the relevant employment, if the individual still held the employment when the amount was paid.
(5) Condition C is that the amount is paid at a time which falls within the run-off period.
(6) In this section and section 410—
“relevant employment” means the employment mentioned in section 401(1);
“run-off period” means the period which—
starts with the day on which the relevant employment terminated, and
ends with the last day of the sixth tax year following the tax year in which the period started.
410 Exception for payments and benefits in respect of certain legal expenses etc and indemnity insurance: individual deceased
(1) This Chapter does not apply to a payment or other benefit received by an individual’s personal representatives if or to the extent that—
(a) in the case of a cash benefit, it is provided for meeting the cost of a deductible amount, or
(b) in the case of a non-cash benefit, it is or represents a benefit equivalent to the cost of paying a deductible amount.
(2) For the purposes of this section “deductible amount” means an amount which meets conditions A to C.
(3) Condition A is that the amount is paid by the individual’s personal representatives or by the former employer on behalf of the individual's personal representatives .
(4) Condition B is that a deduction for the amount would have been allowed under section 346 from earnings from the relevant employment, if—
(a) the individual had not died,
(b) the amount had been paid by the individual, and
(c) the individual still held the employment when the amount was paid.
(5) Condition C is that the amount is paid at a time which falls within the run-off period.
411 Exception for payments and benefits for forces
(1) This Chapter does not apply to a payment or other benefit provided—
(a) under a Royal Warrant, Queen’s Order or Order in Council relating to members of Her Majesty’s forces, or
(b) by way of payment in commutation of annual or other periodical payments authorised by any such Warrant or Order.
(2) This Chapter does not apply to a payment or other benefit provided under a scheme established by an order under section 1(1) of the Armed Forces (Pensions and Compensation) Act 2004.
412 Exception for payments and benefits provided by foreign governments etc.
(1) This Chapter does not apply to—
(a) a benefit provided under a pension scheme administered by the government of an overseas territory within the Commonwealth, or
(b) a payment of compensation for loss of career, interruption of service or disturbance made—
(i) in connection with any change in the constitution of any such overseas territory, and
(ii) to a person who was employed in the public service of the territory before the change.
(2) References in subsection (1) to—
(a) an overseas territory,
(b) the government of such a territory, and
(c) employment in the public service of such a territory,
have the meanings given in section 615 of ICTA.
(A1) This section applies to a payment or other benefit if—
(a) the payment or other benefit is within section 401(1)(a), and the employee or former employee is non-UK resident for the tax year in which the employment terminates, or
(b) the payment or other benefit is within section 401(1)(b) or (c).
(1) This Chapter does not apply if the service of the employee or former employee in the employment in respect of which the payment or other benefit is received included foreign service comprising—
(a) three-quarters or more of the whole period of service ending with the date of the termination or change in question, or
(b) if the period of service ending with that date exceeded 10 years, the whole of the last 10 years, or
(c) if the period of service ending with that date exceeded 20 years, one-half or more of that period, including any 10 of the last 20 years.
(2) In subsection (1) “foreign service” means service to which subsection (2A), (3), (4) or (6) applies.
(2A) This subsection applies to service in or after the tax year 2013-14—
(a) to the extent that it consists of duties performed outside the United Kingdom in respect of which earnings would not be relevant earnings, or
(b) if a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings).
(3) This subsection applies to service in or after the tax year 2003-04 but before the tax year 2013-14 such that—
(a) any earnings from the employment would not be relevant earnings, or
(b) a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings).
(3ZA) In subsection (2A)(a) “relevant earnings” means—
(a) for service in or after the tax year 2025-26, earnings—
(i) to which section 15 applies, and
(ii) if the employee is a qualifying new resident for the purposes of Chapter 5C of Part 2 for that tax year, which are not qualifying foreign general earnings within the meaning of section 41T (qualifying foreign general earnings), and
(b) for service before tax year 2025-26, earnings to which section 15 applies and to which that section would apply even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year.
(3A) In subsection (3)(a) “relevant earnings” means—
(a) for service in or after the tax year 2008-09, earnings—
(i) which are for a tax year in which the employee is ordinarily UK resident,
(ii) to which section 15 applies, and
(iii) to which that section would apply, even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year, and
(b) for service before the tax year 2008-09, general earnings to which section 15 or 21 as originally enacted applies.
(4) This subsection applies to service before the tax year 2003-04 and after the tax year 1973-74 such that—
(a) the emoluments from the employment were not chargeable under Case I of Schedule E, or would not have been so chargeable had there been any, or
(b) a deduction equal to the whole amount of the emoluments from the employment was or would have been allowable under a foreign earnings deduction provision.
(5) In subsection (4) “foreign earnings deduction provision” means—
(a) paragraph 1 of Schedule 2 to FA 1974,
(b) paragraph 1 of Schedule 7 to FA 1977, or
(c) section 192A or 193(1) of ICTA.
(6) This subsection applies to service before the tax year 1974-75 such that tax was not chargeable in respect of the emoluments of the employment—
(a) in the tax year 1956-57 or later, under Case I of Schedule E, or
(b) in earlier tax years, under Schedule E,
or it would not have been so chargeable had there been any such emoluments.
(1) This Chapter does not apply to a payment which meets conditions A and B.
(2) Condition A is that the payment meets the whole or part of legal costs incurred by the employee exclusively in connection with the termination of the employee’s employment.
(3) Condition B is that either—
(a) the payment is made pursuant to an order of a court or tribunal, or
(b) the termination of the employee’s employment results in a settlement agreement between the employer and the employee and —
(i) the settlement agreement provides for the payment to be made by the employer, and
(ii) the payment is made directly to the employee’s lawyer.
(4) In this section—
...
“lawyer” has the same meaning as “qualified lawyer” in section 203(4) of the Employment Rights Act 1996 or article 245(4) of the Employment Rights (Northern Ireland) Order 1996;
“legal costs” means fees payable for the services and disbursements of a lawyer.
(1) This section applies if—
(za) either—
(i) the payment or other benefit is within section 401(1)(a), and the employee or former employee is non-UK resident for the tax year in which the employment terminates, or
(ii) the payment or other benefit is within section 401(1)(b) or (c),
(a) the service of the employee or former employee in the employment in respect of which the payment or other benefit is received includes foreign service, and
(b) section 413(1) does not except the payment or other benefit from the application of this Chapter.
(2) The taxable person may claim relief in the form of a proportionate reduction of the amount that would otherwise—
(a) be treated as earnings by section 402B(1), or
(b) count as employment income as a result of section 403
(3) The proportion is that which the length of the foreign service bears to the whole length of service in the employment before the date of the termination or change in question.
(4) A person’s entitlement to relief under this section is limited as mentioned in subsection (5) if the person is entitled—
(a) to deduct, retain or satisfy income tax out of a payment which the person is liable to make, or
(b) to charge any income tax against another person.
(5) The relief must not reduce the amount of income tax for which the person is liable below the amount the person is entitled so to deduct, retain, satisfy or charge.
(6) In this section “foreign service” has the same meaning as in section 413(2).
414A Exception for payments and benefits under section 615(3) schemes
(1) This Chapter does not apply to a payment or other benefit provided in the form of a lump sum under a section 615(3) scheme.
(2) In this section, “section 615(3) scheme” means a superannuation fund to which section 615(3) of ICTA applies.
414B Exception in certain cases of foreign service as seafarer
(1) This section applies to a payment or other benefit if—
(a) the payment or other benefit is within section 401(1)(a), and
(b) the employee or former employee is UK resident for the tax year in which the employment terminates.
(2) This Chapter does not apply if the service of the employee or former employee in the employment in respect of which the payment or other benefit is received included foreign seafaring service comprising—
(a) three-quarters or more of the whole period of service ending with the date of the termination in question, or
(b) if the period of service ending with that date exceeded 10 years, the whole of the last 10 years, or
(c) if the period of service ending with that date exceeded 20 years, one-half or more of that period, including any 10 of the last 20 years.
(3) In subsection (2) “foreign seafaring service” means service to which subsection (4), (5) or (7) applies.
(4) This subsection applies to service in or after the tax year 2003-04 such that a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings).
(5) This subsection applies to service before the tax year 2003-04 and after the tax year 1973-74 such that a deduction equal to the whole amount of the emoluments from the employment was or would have been allowable under a seafarers' earnings deduction provision.
(6) In subsection (5) “seafarers' earnings deduction provision” means—
(a) paragraph 1 of Schedule 2 to FA 1974 so far as relating to employment as a seafarer,
(b) paragraph 1 of Schedule 7 to FA 1977 so far as relating to employment as a seafarer,
(c) section 192A of ICTA, or
(d) section 193(1) of ICTA so far as relating to employment as a seafarer.
(7) This subsection applies to service before the tax year 1974-75 in an employment as a seafarer such that tax was not chargeable in respect of the emoluments of the employment—
(a) in the tax year 1956-57 or later, under Case I of Schedule E, or
(b) in earlier tax years, under Schedule E,
or it would not have been so chargeable had there been any such emoluments.
(8) In this section “employment as a seafarer” is to be read in accordance with section 384.
414C Reduction in other cases of foreign service as seafarer
(1) This section applies if—
(a) the payment or other benefit is within section 401(1)(a),
(b) the employee or former employee is UK resident for the tax year in which the employment terminates,
(c) the service of the employee or former employee in the employment in respect of which the payment or other benefit is received includes foreign service, and
(d) section 414B(2) does not except the payment or other benefit from the application of this Chapter.
(2) The taxable person may claim relief in the form of a proportionate reduction of the amount that would otherwise—
(a) be treated as earnings by section 402B(1), or
(b) count as employment income as a result of section 403.
(3) The proportion is that which the length of the foreign seafaring service bears to the whole length of service in the employment before the date of the termination in question.
(4) A person's entitlement to relief under this section is limited as mentioned in subsection (5) if the person is entitled—
(a) to deduct, retain or satisfy income tax out of a payment which the person is liable to make, or
(b) to charge any income tax against another person.
(5) The relief must not reduce the amount of income tax for which the person is liable below the amount the person is entitled so to deduct, retain, satisfy or charge.
(6) In this section “foreign seafaring service” has the same meaning as in section 414B(2).
(1) In the case of a cash benefit, for the purposes of this Chapter the amount of a payment or other benefit is taken to be the amount received.
(2) In the case of a non-cash benefit, for the purposes of this Chapter the amount of a payment or other benefit is taken to be the greater of—
(a) the amount of earnings (as defined in Chapter 1 of Part 3) that the benefit would give rise to if it were received by an employee within section 15 for performance of the duties of an employment (money’s worth), and
(b) the cash equivalent of the benefit under the benefits code if it were so received and the code applied to it.
(3) For the purposes of subsection (2), the benefits code has effect with the modifications in subsections (4), (6) and (7).
(4) References in the benefits code to the employee are to be taken as references to the taxable person and any other person by whom the benefit is received.
(5) For the purposes of subsection (4), section 401(4)(a) is to be disregarded.
(6) References in the benefits code to the employer are to be taken as including references to the former employer.
(7) Where—
(a) section 106 (cash equivalent: cost of accommodation over £75,000) applies, and
(b) the sum referred to in section 105(2)(b) (the sum made good) exceeds the amount referred to in section 105(2)(a) (the rental value),
the amount to be subtracted under paragraph (b) of step 4 of the calculation in section 106(2) is that excess (and not only the excess rent referred to there).
416 Notional interest treated as paid if amount charged for beneficial loan
(1) This section applies if an amount (“the taxable amount”) consisting of, or including, an amount representing the benefit of a loan counts as a person’s employment income in a tax year under section 403.
(2) That person is to be treated for the purposes of the Tax Acts (other than this Chapter) as having paid interest on the loan in the tax year equal to the lesser of—
(a) the amount representing the cash equivalent of the loan, and
(b) the taxable amount.
(3) The interest is to be treated—
(a) as accruing during the period in the tax year during which the loan is outstanding, and
(b) as paid at the end of the period.
(4) The interest is not to be treated—
(a) as income of the person making the loan, or
(b) as relevant loan interest to which section 369 of ICTA applies (mortgage interest payable under deduction of tax).
(1) This Part contains special rules about cases where securities, interests in securities or securities options are acquired in connection with an employment.
(2) The rules are contained in—
Chapter 2 (restricted securities),
Chapter 3 (convertible securities),
Chapter 3A (securities with artificially depressed market value),
Chapter 3B (securities with artificially enhanced market value),
Chapter 3C (securities acquired for less than market value),
Chapter 3D (securities disposed of for more than market value),
Chapter 4 (post-acquisition benefits from securities),
Chapter 5 (securities options),
Chapter 6 (... share incentive plans),
Chapter 7 (... SAYE option schemes),
Chapter 8 (... CSOP schemes),
Chapter 9 (enterprise management incentives), and
Chapter 10 (priority share allocations).
(3) The following make provision for amounts to count as employment income—
Chapters 2 to 6, and
Chapter 8.
(4) The following make provision for exemptions and reliefs from income tax—
Chapters 2 and 3, and
Chapters 5 to 10.
(5) Chapter 11 contains supplementary provisions relating to employee benefit trusts.
(6) Section 5(1) (application of employment income Parts to office-holders generally) does not apply to Chapters 6 to 10; and section 549(5) makes provision about its application to Chapter 11.
(A1) This Part needs to be read with Chapter 5B of Part 2 (taxable specific income from employment-related securities etc: internationally mobile employees).
(1) In Part 3—
Chapter 1 (earnings), and
Chapter 10 (taxable benefits: residual liability to charge),
may also have effect in relation to securities and interests in securities ....
(1A) But Chapters 1 and 10 of Part 3 do not have effect in relation to—
(a) the acquisition of employment-related securities options (within the meaning of Chapter 5 of Part 7), or
(b) chargeable events (within the meaning given by section 477) occurring in relation to such options.
(2) Part 7 of Schedule 7 (transitional provisions relating to securities and securities options) may also be relevant.
(3) In view of section 49 of FA 2000 (phasing out of APS schemes) the following are not rewritten in this Act and continue in force unaffected by the repeals made by this Act—
section 186 of ICTA (APS schemes) and section 187 of that Act (interpretation) so far as relating to APS schemes, and
Schedule 9 to ICTA (approval of share schemes) so far as relating to APS schemes and Schedule 10 to that Act (further provisions about APS schemes).
“APS schemes” means profit sharing schemes approved under Schedule 9 to ICTA.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Subject to subsections (5) and (6), for the purposes of this Chapter and Chapters 2 to 5 the following are “securities”—
(a) shares in any body corporate (wherever incorporated) or in any unincorporated body constituted under the law of a country or territory outside the United Kingdom,
(aa) rights under contracts of insurance other than excluded contracts of insurance,
(b) debentures, debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness (other than contracts of insurance),
(c) warrants and other instruments entitling their holders to subscribe for securities (whether or not in existence or identifiable),
(d) certificates and other instruments conferring rights in respect of securities held by persons other than the persons on whom the rights are conferred and the transfer of which may be effected without the consent of those persons,
(e) units in a collective investment scheme,
(f) options and futures, ...
(g) rights under contracts for differences or contracts similar to contracts for differences (other than contracts of insurance), and
(h) arrangements to which section 564G of ITA 2007 (alternative finance arrangements: investment bond arrangements) applies.
(1A) For the purposes of subsection (1)(aa) a contract of insurance is an excluded contract of insurance if it is—
(a) a contract for an annuity which is (or will be) pension income (see Part 9),
(b) a contract of long-term insurance, other than an annuity contract, which does not have a surrender value and is not capable of acquiring one (whether on conversion or in any other circumstances), or
(c) a contract of general insurance other than one which falls, in accordance with generally accepted accounting practice, to be accounted for as a financial asset or liability.
(1B) In this section—
“contract of insurance”,
“contract of long-term insurance”, and
“contract of general insurance”,
have the same meaning as in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
(2) In subsection (1)(e) “collective investment scheme” means arrangements—
(a) which are made with respect to property of any description, including money, and
(b) the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
(3) In subsection (1)(f) “futures” means rights under a contract for the sale of a commodity or other property under which delivery is to be made at a future date at a price agreed when the contract is made; and for this purpose a price is to be taken to be agreed when the contract is made—
(a) if it is left to be determined by reference to the price at which a contract is to be entered into on a market or exchange or could be entered into at a time and place specified in the contract, and
(b) in a case where the contract is expressed to be by reference to a standard lot and quality, even if provision is made for a variation in the price to take account of any variation in quantity or quality on delivery.
(4) For the purposes of subsection (1)(g) a contract similar to a contract for differences is a contract—
(a) which is not a contract for differences, but
(b) the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in the value or price of property or an index or other factor designated in the contract.
(5) The following are not “securities” for the purposes of this Chapter or Chapters 2 to 5—
(a) cheques and other bills of exchange, bankers' drafts and letters of credit (other than bills of exchange accepted by a banker),
(b) money and statements showing balances on a current, deposit or savings account,
(c) leases and other dispositions of property and heritable securities, and
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) securities options.
(6) The Treasury may by order amend subsections (1) to (5).
(7) An order under subsection (6) may include any appropriate consequential provision (including provision amending any enactment).
(8) In this Chapter and Chapters 2 to 5—
“interest”, in relation to securities (or shares), means an interest in them less than full beneficial ownership and includes an interest in proceeds of their sale, but does not include a right to acquire them,
“securities option” means a right to acquire securities other than a right to acquire securities which is acquired pursuant to a right or opportunity made available under arrangements the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions, and
“shares” includes stock.
(1) In this Chapter and Chapters 2 to 5 “market value” has the same meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 of that Act.
(2) Where consideration for anything is given in the form of an asset (as opposed to a payment), any reference in this Chapter or any of Chapters 2 to 5 to the amount of the consideration is to the market value of the asset.
(1) This section applies for determining for the purposes of Chapters 2 to 5 the amount of the consideration given for anything.
(2) If any consideration is given partly in respect of one thing and partly in respect of another, the amount given in respect of the different things is to determined on a just and reasonable apportionment.
(3) The consideration which is taken to be given wholly or partly for anything does not include the performance of any duties of, or in connection with, an employment.
(4) No amount is to be counted more than once in calculating the amount of any consideration.
(1) Subject as follows (and to any provision contained in Chapters 2 to 4A ) those Chapters apply to securities, or an interest in securities, acquired by a person where the right or opportunity to acquire the securities or interest is available by reason of an employment of that person or any other person.
(2) For the purposes of subsection (1)—
(a) securities are, or an interest in securities is, acquired at the time when the person acquiring the securities or interest becomes beneficially entitled to those securities or that interest (and not, if different, the time when the securities are, or interest is, conveyed or transferred), and
(b) “employment” includes a former or prospective employment.
(3) A right or opportunity to acquire securities or an interest in securities made available by a person’s employer, or by a person connected with a person’s employer, is to be regarded for the purposes of subsection (1) as available by reason of an employment of that person unless—
(a) the person by whom the right or opportunity is made available is an individual, and
(b) the right or opportunity is made available in the normal course of the domestic, family or personal relationships of that person.
(4) Chapters 2 to 4A cease to apply to securities, or an interest in securities, when subsection (5), (6) or (7) is satisfied.
(5) This subsection is satisfied immediately after the securities are, or the interest in securities is, disposed of otherwise than to an associated person.
(6) This subsection is satisfied immediately before the death of the employee.
(7) This subsection is satisfied 7 years after the first date after the acquisition on which the employee is an employee of none of the following—
(a) the employer,
(b) (if the securities are, or the interest in securities is an interest in, securities issued by a company) the company by which they are issued, or
(c) a person connected with a person within paragraph (a) or (b).
(8) In this Chapter and Chapters 2 to 4A —
“the acquisition”, in relation to employment-related securities, means the acquisition of the employment-related securities pursuant to the right or opportunity available by reason of the employment,
“the employment”, in relation to employment-related securities, means the employment by reason of which the right or opportunity to acquire the employment-related securities is available (“the employee” and “the employer” being construed accordingly unless otherwise indicated), and
“employment-related securities” means securities or an interest in securities to which Chapters 2 to 4 apply (ignoring any provision of any of those Chapters which limits the application of the Chapter to a particular description or descriptions of employment-related securities).
(1) For the purposes of this Chapter and Chapters 2 to 4 the following are “associated persons” in relation to employment-related securities—
(a) the person who acquired the employment-related securities on the acquisition,
(b) (if different) the employee, and
(c) any relevant linked person.
(2) A person is a relevant linked person if—
(a) that person (on the one hand), and
(b) either the person who acquired the employment-related securities on the acquisition or the employee (on the other),
are or have been connected or (without being or having been connected) are or have been members of the same household.
(3) But a company which would otherwise be a relevant linked person is not if it is—
(a) the employer,
(b) the person from whom the employment-related securities were acquired,
(c) the person by whom the right or opportunity to acquire the employment-related securities was made available, or
(d) the person by whom the employment-related securities (or the securities in which they are an interest) were issued.
421D Replacement and additional securities and changes in interests
(1) Subsections (2) and (3) apply where an associated person is entitled to employment-related securities (the “original securities”) and either—
(a) as a result of the conversion of the original securities (or the securities in which they are an interest), or of any other transaction or series of transactions, that person ceases to be entitled to the original securities but that person or another associated person acquires securities or an interest in securities (the “replacement securities”), or
(b) by virtue of that person being entitled to the original securities, that person or another associated person acquires other securities or an interest in other securities (the “additional securities”).
(2) The replacement securities or the additional securities are to be regarded for the purposes of section 421B(1) (securities acquired pursuant to a right or opportunity available by reason of an employment) as acquired pursuant to the same right or opportunity as the original securities.
(3) Where the market value of the original securities is reduced by reason of the issue of, or of securities including, the replacement securities or the additional securities (or the securities in which they are an interest), the amount of that reduction is to be treated for the purposes of Chapters 2 and 3 as consideration or additional consideration given for the acquisition of the replacement securities or the additional securities and for the purposes of Chapter 3C as a payment made for their acquisition at or before the time of the acquisition.
(4) Subsections (2) and (3) apply whether or not the replacement securities, or the additional securities, were acquired for consideration or a payment was made for their acquisition at or before the time of the acquisition.
(5) Where Chapters 2 to 4A apply to an interest in securities, an increase of that interest is to be treated for the purposes of section 421B(1) (securities acquired pursuant to a right or opportunity available by reason of an employment) as a separate interest acquired pursuant to the same right or opportunity as the original interest.
(6) Where Chapters 2 to 4A apply to an interest in securities, a reduction of that interest (otherwise than by a disposal to an associated person) is to be treated for the purposes of those Chapters as the disposal otherwise than to an associated person of a separate interest proportionate to the reduction.
(1) Chapters 2, 3 and 3C do not apply in relation to employment-related securities that are shares acquired under the terms of an offer to the public or an interest in shares so acquired.
(1A) But subsection (1) does not disapply those Chapters if the main purpose (or one of the main purposes)—
(a) of the arrangements under which the right or opportunity under which the shares were acquired, or
(b) for which the shares are held,
is the avoidance of tax or national insurance contributions.
(2) In a case within subsection (1) of section 544 (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 subsection is to be treated for the purposes of this section as made under the terms of an offer to the public.
(3) Subsection (2) applies whether or not there is any benefit within section 544(2) (benefit derived from entitlement to priority allocation exempt from income tax).
(1) For the purposes of Chapters 2 to 4 a company is “employee-controlled” by virtue of shares of a class if—
(a) the majority of the company’s shares of that class (other than any held by or for the benefit of an associated company) are held by or for the benefit of employees of the company or a company controlled by the company, and
(b) those employees are together able as holders of the shares to control the company.
In this subsection “employee” includes a person who is to be or has been an employee.
(2) In this section and Chapters 2 to 4 “associated company” has the meaning given by section 449 of CTA 2010.
421I Consideration for acquisition of employment-related securities
(1) This section applies for determining for the purposes of Chapters 2 to 3A the amount of the consideration given for the acquisition of employment-related securities.
(2) References to consideration given for the acquisition of the employment-related securities are to consideration given by—
(a) the employee, or
(b) (if not the employee) the person by whom the employment-related securities were acquired.
(3) The amount of the consideration given by a person for the acquisition of the employment-related securities includes the amount of any consideration given for a right to acquire the employment-related securities.
(4) If the right to acquire the employment-related securities (“the new option”) is the whole or part of the consideration for the assignment or release of another right to acquire them (“the old option”), the amount of the consideration given for the new option is to be treated as being the sum of—
(a) the amount by which the amount of the consideration given for the old option exceeds the amount of any consideration for the assignment or release of the old option, apart from the new option, and
(b) any valuable consideration given for the new option, apart from the old option.
(5) Two or more transactions are to be treated for the purposes of subsection (4) as a single transaction by which a right to acquire the employment-related securities is assigned for a consideration which consists of or includes another right to acquire the employment-related securities if—
(a) the transactions result in a person ceasing to hold a right to acquire the employment-related securities and that person or a connected person coming to hold another right to acquire them, and
(b) one or more of the transactions is effected under arrangements to which two or more persons who hold rights to acquire the employment-related securities, in respect of which there may be a liability to tax under Chapter 5 of this Part (securities options), are parties.
(6) Subsection (5) applies regardless of the order in which the assignment and the acquisition occur.
(7) In this section “release”, in relation to a right to acquire the employment-related securities, includes agreeing to the restriction of the exercise of the right.
(1) This section applies in relation to reportable events.
(2) Section 421K explains what are reportable events for the purposes of this section.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) An officer of Revenue and Customs may by notice require any person to provide the officer with such particulars of any reportable events—
(a) which take place in a period specified in the notice, and
(b) in relation to which that person is a responsible person,
as are required by the notice or, if no reportable event in relation to which that person is a responsible person has taken place in that period, to state that fact.
(5) A notice under subsection (4) must specify a date by which it must be complied with.
(6) That date must not be less than 30 days after the date when the notice is given.
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(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) Section 421L explains who are the responsible persons in relation to a reportable event.
(10) The particulars required by a notice under this section must be provided in a form specified by the Commissioners for Her Majesty’s Revenue and Customs.
(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) This section applies in relation to a person who is (or has been) a responsible person (see section 421L) in relation to reportable events (see section 421K).
(2) The person must give to Her Majesty's Revenue and Customs (“HMRC”) a return for each tax year falling (wholly or partly) in the person's reportable event period.
(3) The person's “reportable event period” is the period—
(a) beginning when the first reportable event occurs in relation to which the person is a responsible person, and
(b) ending when the person will no longer be a responsible person in relation to reportable events.
(4) The return for a tax year must—
(a) contain, or be accompanied by, such information as HMRC may require, and
(b) be given on or before 6 July in the following tax year.
(5) The information which may be required under subsection (4)(a) includes (in particular) information to enable HMRC to determine the liability to tax, including capital gains tax, of any employee.
(6) If the person becomes aware that—
(a) anything which should have been included in, or should have accompanied, a return for a tax year was not included in, or did not accompany, the return,
(b) anything which should not have been included in, or should not have accompanied, a return for a tax year was included in, or accompanied, the return, or
(c) any other error or inaccuracy has occurred in relation to a return for a tax year,
the person must give an amended return correcting the position to HMRC without delay.
(7) A person's return for a tax year under this section need not contain, or be accompanied by, duplicate information and a person is not required to give a return for a tax year under this section if it would only contain, or be accompanied by, duplicate information.
(8) “Duplicate information” means information which is contained in or accompanies—
(a) a return which another person gives for the tax year under this section, or
(b) a return which any person gives for the tax year under any of the following provisions—
(i) paragraph 81B of Schedule 2 (annual return for Schedule 2 SIP);
(ii) paragraph 40B of Schedule 3 (annual return for Schedule 3 SAYE option scheme);
(iii) paragraph 28B of Schedule 4 (annual return for Schedule 4 CSOP scheme);
(iv) paragraph 52 of Schedule 5 (annual return for company whose shares are subject to qualifying options under the EMI code).
(1) A return under section 421JA, and any information accompanying the return, must be given electronically.
(2) But, if HMRC consider it appropriate to do so, HMRC may allow a person to give a return or any accompanying information in another way; and, if HMRC do so, the return or information must be given in that other way.
(3) The Commissioners for Her Majesty's Revenue and Customs—
(a) must prescribe how returns and accompanying information are to be given electronically;
(b) may make different provision for different cases or circumstances.
(1) This section applies if a person fails to give a return under section 421JA for a tax year (containing, or accompanied by, all required information) on or before the date mentioned in section 421JA(4)(b) (“the date for delivery”).
(2) The person is liable for a penalty of £100.
(3) If the person's failure continues after the end of the period of 3 months beginning with the date for delivery, the person is liable for a further penalty of £300.
(4) If the person's failure continues after the end of the period of 6 months beginning with the date for delivery, the person is liable for a further penalty of £300.
(5) The person is liable for a further penalty under this subsection if—
(a) the person's failure continues after the end of the period of 9 months beginning with the date for delivery,
(b) HMRC decide that such a penalty should be payable, and
(c) HMRC give notice to the person specifying the period in respect of which the penalty is payable.
(The person may be liable for more than one penalty under this subsection.)
(6) The penalty under subsection (5) is £10 for each day that the failure continues during the period specified in the notice under subsection (5)(c).
(7) The period specified in the notice under subsection (5)(c)—
(a) may begin earlier than the date on which the notice is given, but
(b) may not begin until after the end of the period mentioned in subsection (5)(a) or, if relevant, the end of any period specified in any previous notice under subsection (5)(c) given in relation to the failure.
(8) Liability for a penalty under this section does not arise if the person satisfies HMRC (or, on an appeal under section 421JF, the tribunal) that there is a reasonable excuse for the person's failure.
(9) For the purposes of subsection (8)—
(a) an insufficiency of funds is not a reasonable excuse, unless attributable to events outside the person's control,
(b) where the person relies on any other person to do anything, that is not a reasonable excuse unless the (first mentioned) person took reasonable care to avoid the failure, and
(c) where the person had a reasonable excuse for the failure but the excuse ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
(1) This section applies if a return under section 421JA, or any information accompanying such a return—
(a) is given otherwise than in accordance with section 421JB, or
(b) contains a material inaccuracy—
(i) which is careless or deliberate, or
(ii) which is not corrected as required by section 421JA(6).
(2) The person in question is liable for a penalty of an amount decided by HMRC.
(3) The penalty must not exceed £5,000.
(4) For the purposes of subsection (1)(b)(i) an inaccuracy is careless if it is due to a failure by the person in question to take reasonable care.
(1) This section applies if a person is liable for a penalty under section 421JC or 421JD.
(2) HMRC must assess the penalty and notify the person of the assessment.
(3) Subject to subsection (4), the assessment must be made no later than 12 months after the date on which the person becomes liable for the penalty.
(4) In the case of a penalty under section 421JD(1)(b), the assessment must be made no later than—
(a) 12 months after the date on which HMRC become aware of the inaccuracy, and
(b) 6 years after the date on which the person becomes liable for the penalty.
(5) A penalty payable under this Part must be paid—
(a) no later than 30 days after the date on which the notice under subsection (2) is given to the person, or
(b) if notice of appeal is given against the penalty under section 421JF(1) or (2), no later than 30 days after the date on which the appeal is determined or withdrawn.
(6) The penalty may be enforced as if it were income tax or, if the person is a company within the charge to corporation tax, corporation tax charged in an assessment and due and payable.
(7) Sections 100 to 103 of TMA 1970 do not apply to a penalty under section 421JC or 421JD.
(1) A person may appeal against a decision of HMRC that the person is liable for a penalty under section 421JC or 421JD.
(2) A person may appeal against a decision of HMRC as to the amount of a penalty payable by the person under section 421JC or 421JD.
(3) Notice of appeal must be given to HMRC no later than 30 days after the date on which the notice under section 421JE(2) is given to the person.
(4) On an appeal under subsection (1) which is notified to the tribunal, the tribunal may affirm or cancel the decision.
(5) On an appeal under subsection (2) which is notified to the tribunal, the tribunal may—
(a) affirm the amount of the penalty decided, or
(b) substitute another amount for that amount.
(6) Subject to this section and section 421JE, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to an appeal under this section as they have effect in relation to an appeal against an assessment to income tax or, if the person is a company within the charge to corporation tax, corporation tax.
(1) This section applies for the purposes of sections 421J and 421JA (duties to provide information and annual returns).
(2) Each of the events mentioned in subsection (3) is a reportable event.
(3) The events are—
(a) an acquisition (or an event treated as an acquisition) of securities, an interest in securities or a securities option pursuant to a right or opportunity available by reason of the employment of the person who acquires the securities, interest in securities or securities option or of any other person,
(b) an event which is a chargeable event in relation to securities, or an interest in securities, for the purposes of section 426 (chargeable events in relation to restricted securities and restricted interests in securities),
(c) an event which is a chargeable event in relation to securities, or an interest in securities, for the purposes of section 438 (chargeable events in relation to convertible securities and interests in convertible securities),
(d) the doing of anything which gives rise to a taxable amount counting as employment income under section 446L (artificial enhancement of market value of securities),
(e) an event which discharges a notional loan relating to securities, or an interest in securities, under section 446U (securities and interests in securities acquired for less than market value),
(f) a disposal of securities, or an interest in securities, by virtue of which Chapter 3D of this Part applies (securities and interests in securities disposed of for more than market value),
(g) the receipt of a benefit which gives rise to a taxable amount counting as employment income under section 447 (charge on benefit from securities or interest in securities) or would give rise to such an amount but for Chapter 4A (shares in research institution spin-out companies),
(h) the assignment or release of a securities option acquired pursuant to a right or opportunity available by reason of the employment of the person who acquires the securities option or any other person, and
(i) the receipt of a benefit in money or money’s worth which is (or by virtue of section 477(6) is to be regarded as being) received in connection with such a securities option.
(1) This section applies for the purposes of sections 421J and 421JA (duties to provide information and annual returns) .
(2) Each of the following persons is a responsible person in relation to a reportable event.
(3) The persons are—
(a) the employer in question,
(b) any host employer of the employee in question,
(ba) if the employee in question is a continental shelf worker and PAYE regulations do not apply to the employer in question, any person who is a relevant person in relation to the employee in question,
(c) the person from whom the securities in question were, or interest or option in question was, acquired, and
(d) in relation to a reportable event concerning securities or an interest in securities which are not excluded securities, the person by whom the securities were issued.
(4) In subsection (3)(b) “host employer” means a person other than the employer in question—
(a) for whom the employee in question works at the time of the reportable event, and
(b) who would, by virtue of subsection (2) of section 689 (employees of non-UK employers working for a person other than the employer), be treated for the purposes of PAYE regulations as making a payment of PAYE income of the employee in question if a payment to which subsection (5) would apply were made by the employer in question in respect of the period during which the employee works for the other person.
(5) For the purposes of subsection (4)(b) this subsection would apply to a payment if—
(a) it were a payment of PAYE income of the employee, and
(b) the conditions in subsection (1)(c) and (d) of section 689 were satisfied in relation to the payment.
(5A) In subsection (3)(ba) “continental shelf worker” and “relevant person” have the meaning given by section 689A(11) (PAYE: oil and gas workers on the continental shelf).
(6) For the purposes of subsection (3)(d) securities are excluded securities in relation to a reportable event if they are—
(a) loan stock, bonds or other instruments creating or acknowledging indebtedness issued by or on behalf of any national or regional government or local authority (in the United Kingdom or elsewhere) or any body whose members consists of states, national or regional governments or local authorities, or
(b) securities which are issued by a person who, at the time of the reportable event, is not connected with the employer in question and which are listed on a recognised stock exchange or dealt in on any designated market in the United Kingdom.
(7) In subsection (6)(b) “designated” means designated by an order made by the Commissioners for Her Majesty's Revenue and Customs for the purposes of that provision.
(8) An order under subsection (7) may—
(a) designate a market by name or by reference to any class or description of market, and
(b) vary or revoke a previous order under that subsection.