446N Securities subject to restriction during relevant period
(1) This section applies where the employment-related securities have been restricted securities or a restricted interest in securities at any time during the relevant period.
(2) DA is to be deducted from the amount determined under section 446L(4) (or, where section 446M applies, the amount determined under sections 446L(4) and 446M).
(3) DA is the aggregate of the amounts arrived at under subsection (4) in relation to each event occurring during the relevant period that is a chargeable event in relation to the employment-related securities.
(4) The amount is—
TA-ARTA
(5) TA is the taxable amount actually determined under section 428 in relation to the chargeable event.
(6) AR TA is the taxable amount which would have been determined under section 428 in relation to the chargeable event if any non-commercial increases during the period—
(a) beginning at the same time as the relevant period, and
(b) ending immediately before the chargeable event,
had been disregarded.
(7) If any of the employment income arising under section 426 by virtue of the chargeable event is foreign securities income within the meaning of section 41C, reduce the taxable amount mentioned in subsection (5) by the amount of the foreign securities income.
(8) If any of the employment income that would have arisen (if the non-commercial interests mentioned in subsection (6) had been disregarded) under section 426 by virtue of the chargeable event would have been foreign securities income (within that meaning), reduce the taxable amount mentioned in subsection (6) by the amount of the foreign securities income.
(1) None of the provisions specified in subsection (2) (exceptions from charges for certain company shares) apply in relation to employment-related securities if the market value of the employment-related securities at the time of the acquisition has been increased by at least 10% by non-commercial increases within the period of 7 years ending with the acquisition.
(2) The provisions are—
(a) section 429 (restricted securities),
(b) section 443 (convertible securities),
(c) section 446R (securities acquired for less than market value), and
(d) section 449 (post-acquisition benefits from securities).
(3) If section 446L (market value on valuation date increased by more than 10% by non-commercial increases during relevant period) applies in relation to employment-related securities, section 429 does not subsequently apply in relation to the employment-related securities.
(1) This section explains what is meant by “relevant period” and “valuation date” in this Chapter.
(2) The first relevant period in relation to employment-related securities is the period beginning with the date of the acquisition and ending with the following 5th April.
(3) After the first relevant period, each period beginning with 6th April and ending with the following 5th April is a relevant period in relation to the employment-related securities.
(4) But if this Chapter ceases to apply to the employment-related securities during a relevant period, the relevant period ends with the date on which this Chapter ceases to apply to them.
(5) And if this Chapter ceases to apply to an interest in the employment-related securities during a relevant period, the relevant period ends in relation to that interest with the date on which this Chapter ceases to apply to that interest.
(6) In a case where subsection (5) applies, this Chapter has effect separately in relation to that interest and the remainder of the employment-related securities.
(7) In this Chapter “valuation date”, in relation to a relevant period, means the date with which the relevant period ends.
(1) In this Chapter “interest”, in relation to securities, has the meaning indicated in section 420.
(2) In this Chapter “market value” has the meaning indicated in section 421(1).
(3) In this Chapter—
“the acquisition”,
“the employee”, and
“employment-related securities”,
have the meaning indicated in section 421B(8).
(4) In this Chapter—
“restricted interest in securities”, and
“restricted securities”,
have the same meaning as in Chapter 2 of this Part (see sections 423 and 424).
(5) In this Chapter “chargeable event” means an event which is a chargeable event for the purposes of section 426.
(6) In this Chapter “restriction” has the same meaning as in Chapter 2 of this Part (see section 432(8)).
(7) In this Chapter—
“non-commercial increase”, and
“non-commercial reduction”,
have the meaning indicated in section 446K(4).
(8) In this Chapter—
“relevant period”, and
“valuation date”,
have the meaning indicated in section 446O.
(1) This Chapter applies if—
(a) no payment is made for employment-related securities at or before the time of the acquisition, or
(b) the payment made for employment-related securities at or before that time is less than their market value.
(2) For the purposes of subsection (1) any obligation to make a payment or further payment after the time of the acquisition is to be disregarded.
(3) Where the employment-related securities are, or are an interest in, securities which are not fully paid up, the reference in subsection (1) to the market value of the employment-related securities is to what it would be if the securities were fully paid up.
(4) If section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applies in relation to the employment-related securities, this Chapter has effect as if the employment-related securities were not acquired until the occurrence of the first event which is a chargeable event for the purposes of section 426 in relation to the employment-related securities.
(5) This section is subject to section 446R (case outside this Chapter).
(1) This Chapter does not apply if—
(a) the employment-related securities are shares (or an interest in shares) in a company of a class,
(b) all the company’s shares of the class are acquired either for no payment or for a payment less than their market value,
(ba) subsection (1A) is satisfied, and
(c) subsection (3) or (4) is satisfied.
(1A) This subsection is satisfied unless something which affects the employment-related securities has been done (at or before the time of the acquisition) as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.
(2) Where the company’s shares of the class are not fully paid up, the reference in subsection (1) to their market value is to what it would be if they were fully paid up.
(3) This subsection is satisfied if, at the time of the acquisition of the employment-related securities, the company is employee-controlled by virtue of holdings of shares of the class.
(4) This subsection is satisfied if, at that time, the majority of the company’s shares of the class are not employment-related securities.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Where this Chapter applies an interest-free loan (“the notional loan”) is to be treated as having been made to the employee by the employer at the time of the acquisition.
(2) The provisions listed in subsection (3) apply as though the notional loan were an employment-related loan as defined in section 174 if and for so long as the employment has not terminated.
(3) The provisions are—
section 175 (benefit of taxable cheap loan treated as earnings),
section 178 (exception for loans where interest qualifies for tax relief),
section 180 (threshold for benefit of loan to be treated as earnings),
section 182 (normal method of calculation: averaging),
section 183 (alternative method of calculation),
section 184 (interest treated as paid),
section 185 (apportionment of cash equivalent in case of joint loan etc), and
section 187 (aggregation of loans by close company to director).
(4) This section is not affected by section 554Z2(2).
(1) The amount of the notional loan initially outstanding is—
MV-DA
where—
MV is the market value of the employment-related securities at the time of the acquisition, and
DA is the total of any deductible amounts.
(2) Where the employment-related securities are, or are an interest in, securities which are not fully paid up, the reference in subsection (1) to the market value of the employment-related securities is to what it would be if the securities were fully paid up.
(3) For the purposes of subsection (1) each of the following is a “deductible amount”—
(a) any payment made for the employment-related securities by the employee, and any payment so made by the person by whom they were acquired (if not the employee), at or before the time of the acquisition,
(b) any amount that constitutes earnings from the employee’s employment under Chapter 1 of Part 3 (earnings) in respect of the acquisition of the employment-related securities (other than an amount of exempt income),
(ba) any amount treated as earnings from the employee's employment under section 226A (employee shareholder shares: amount treated as earnings) in respect of the acquisition of the employment-related securities (other than an amount of exempt income),
(c) if section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applies in relation to the employment-related securities, any amount that counts as employment income of the employee under section 426 by reason of the first event which is a chargeable event for the purposes of that section in relation to the employment-related securities,
(d) if the employment-related securities were acquired on a conversion of other employment-related securities, any amount that counts as employment income of the employee under section 438 (charge on conversion) by reason of the conversion, ...
(e) if the acquisition is pursuant to a securities option, any amount that counted as employment income of the employee under section 476 (acquisition of securities pursuant to securities option) in respect of the acquisition , and
(f) any amount that has counted as employment income of the employee in respect of the employment under Chapter 2 of Part 7A in relation to the employment-related securities.
(3A) In subsection (3)(b) and (ba) the references to an amount of exempt income, in a case in which the amount that constitutes, or is treated as, earnings in respect of the acquisition is not an amount of general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies, includes any amount that would be an amount of exempt income if any of those charging provisions were to apply.
(4) The amount of the notional loan outstanding at any subsequent time is the difference between—
(a) the amount initially outstanding, and
(b) the amount of any payments or further payments made for the employment-related securities after the acquisition but before that time.
(1) The notional loan is treated as discharged when—
(a) the employment-related securities are disposed of otherwise than to an associated person, ...
(b) if there is an outstanding or contingent liability to pay for the employment-related securities, that liability is released, extinguished, transferred or adjusted so as no longer to bind any associated person (except in circumstances in which subsection (4)(aa) applies), or
(c) something which affects the employment-related securities is done as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.
(1A) Subsection (1)(a) does not apply if, at the time of the acquisition, there was an actual or contingent liability to make one or more further payments equal to the amount initially outstanding for the employment-related securities.
(2) If the notional loan is discharged as the result of an event specified in subsection (1), the amount of the notional loan outstanding immediately before the occurrence of the event counts as employment income of the employee for the relevant tax year (whether or not the employment has terminated before or since the acquisition).
(3) The “relevant tax year” is the tax year in which the notional loan is treated as discharged.
(4) The notional loan is also treated as discharged when—
(a) payments or further payments for the employment-related securities equal to the amount initially outstanding in relation to them have been made by an associated person, ...
(aa) the employment-related securities, together with the liability to make such further payment or payments, are disposed of otherwise than to an associated person and for consideration of an amount that reflects the transfer of the liability, or
(b) the employee dies.
(1) Sections 446S to 446U do not apply if the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the employment-related securities is made available is the avoidance of tax or national insurance contributions.
(2) But instead an amount equal to what would (apart from this section) be the amount of the notional loan initially outstanding by virtue of sections 446S and 446T counts as employment income of the employee for the tax year in which the acquisition takes place.
446V Chapter to be additional to other income tax charges
This Chapter does not affect any liability to income tax arising in respect of the acquisition under—
(a) Chapter 1 of Part 3 (earnings),
(b) Chapter 10 of Part 3 (taxable benefits: residual liability to charge),
(ba) section 226A (employee shareholder shares: amount treated as earnings),
(c) Chapter 3 of this Part (acquisition by conversion),
(d) Chapter 3A of this Part (securities with artificially depressed market value), ...
(e) Chapter 5 of this Part (acquisition of securities pursuant to securities option) , or
(f) Chapter 2 of Part 7A (employment income provided through third parties)
(1) In this Chapter—
“interest”, in relation to securities,
“securities”,
“securities option”, and
“shares”,
have the meaning indicated in section 420.
(2) In this Chapter “market value” has the meaning indicated in section 421(1).
(3) In this Chapter “the acquisition” has the meaning indicated in section 421B(8) (but subject to section 446Q(4)).
(4) In this Chapter—
“the employment”,
“the employee” (except in section 446R),
“the employer”, and
“employment-related securities”,
have the meaning indicated in section 421B(8).
(5) In this Chapter “associated person” has the meaning indicated in section 421C.
(6) In this Chapter—
“associated company”, and
“employee-controlled”,
have the meaning indicated in section 421H.
(7) In this Chapter “the notional loan” has the meaning indicated in section 446S(1).
This Chapter applies if—
(a) employment-related securities are disposed of by an associated person so that no associated person is any longer beneficially entitled to them, and
(b) the disposal is for a consideration which exceeds the market value of the employment-related securities at the time of the disposal.
(1) Where this Chapter applies the amount determined under subsection (3) counts as employment income of the employee for the relevant tax year.
(2) The “relevant tax year” is the tax year in which the disposal occurs.
(3) The amount is—
CD-MV-DA
where—
CD is the amount of the consideration given on the disposal,
MV is the market value of the employment-related securities at the time of the disposal, and
DA is the amount of any expenses incurred in connection with the disposal.
(1) In this Chapter “market value” has the meaning indicated in section 421(1).
(2) For the purposes of this Chapter sections 421(2) and 421A apply for determining the amount of the consideration given for anything.
(3) In this Chapter—
“the employee”, and
“employment-related securities”,
have the meaning indicated in section 421B(8).
(4) In this Chapter “associated person” has the meaning indicated in section 421C.
447 Charge on other chargeable benefits from securities
(1) This Chapter applies if an associated person receives a benefit in connection with employment-related securities .
(2) The taxable amount determined under section 448 counts as employment income of the employee for the relevant tax year.
(3) The “relevant tax year” is the tax year in which the benefit is received.
(4) If the benefit is otherwise chargeable to income tax this section does not apply unless something has been done which affects the employment-related securities as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.
(5) This section is subject to section 449 (case outside this Chapter).
(1) This Chapter does not apply if—
(a) the employment-related securities are shares (or an interest in shares) in a company of a class,
(b) a similar benefit is received by the owners of all the company’s shares of the class,
(ba) subsection (1A) is satisfied, and
(c) subsection (2) or (3) is satisfied.
(1A) This subsection is satisfied unless something which affects the employment-related securities has been done as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.
(2) This subsection is satisfied if, immediately before the receipt of the benefit, the company is employee-controlled by virtue of holdings of shares of the class.
(3) This subsection is satisfied if, immediately before the receipt of the benefit, the majority of the company’s shares of the class are not employment-related securities.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) In this Chapter—
“interest”, in relation to shares, and
“shares”,
have the meaning indicated in section 420(8).
(2) In this Chapter “market value” has the meaning indicated in section 421(1).
(3) In this Chapter—
“the employee” (except in section 449), and
“employment-related securities”,
have the meaning indicated in section 421B(8).
(4) In this Chapter “associated person” has the meaning indicated in section 421C.
(5) In this Chapter—
“associated company”, and
“employee-controlled”,
have the meaning indicated in section 421H.
(1) This Chapter applies where—
(a) an agreement is made for one or more transfers of intellectual property (an “intellectual property agreement”) from one or more research institutions to a company (a “spin-out company”),
(b) a person acquires shares (or an interest in shares) in the spin-out company before the intellectual property agreement is made or within the period of 183 days beginning with the date on which it is made,
(c) the right or opportunity to acquire the shares (or interest in shares) was available by reason of employment by the research institution (or any of them) or by the spin-out company, and
(d) the person is involved in research in relation to any of the intellectual property that is the subject of the intellectual property agreement.
(2) But this Chapter does not apply if the avoidance of tax or national insurance is the main purpose (or one of the main purposes) of the arrangements under which the right or opportunity to acquire the shares (or interest in shares) is made available.