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55 Shares transferred from employee share ownership trust.U.K.

(1)Section 69 of the M1Finance Act 1989 (chargeable events in relation to employee share ownership trusts) is amended in accordance with subsections (2) to (5).

(2)In subsection (1) (definition of “chargeable event”), after paragraph (d) insert—

“(e)where—

(i)the trustees make a qualifying transfer within subsection (3AA) below for a consideration, and

(ii)they do not, during the period specified in subsection (5A) below, expend a sum of not less than the amount of that consideration for one or more qualifying purposes,

the expiry of that period.”.

(3)After subsection (3) insert—

“(3AA)For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if—

(a)it is a transfer of relevant shares made to the trustees of the plan trust of an employee share ownership plan,

(b)the plan is approved under Schedule 8 to the Finance Act 2000 when the transfer is made, and

(c)the consideration (if any) for which the transfer is made does not exceed the market value of the shares.

(3AB)For the purpose of determining whether a transfer by the trustees is a qualifying transfer within subsection (3AA) above, where on or after 21st March 2000—

(a)the trustees transfer or dispose of part of a holding of shares (whether by way of a qualifying transfer or otherwise), and

(b)the holding includes any relevant shares,

the relevant shares shall be treated as transferred or disposed of before any other shares included in that holding.

For this purpose “holding” means any number of shares of the same class held by the trustees, growing or diminishing as shares of that class are acquired or disposed of.

(3AC)For the purposes of subsections (3AA) and (3AB) above—

  • “market value” has the same meaning as in Schedule 8 to the Finance Act 2000; and

  • “relevant shares” means—

    (i)

    shares that are held by the trustees of the employee share ownership trust at midnight on 20th March 2000, and

    (ii)

    shares purchased by those trustees with original funds after that time.

(3AD)For the purposes of subsection (3AC) above—

(a)“original funds” means any money held by the trustees of the employee share ownership trust in a bank or building society account at midnight on 20th March 2000, and

(b)any payment made by the trustees after that time (whether to acquire shares or otherwise) shall be treated as made out of original funds (and not out of money received after that time) until those funds are exhausted.”.

(4)In subsection (5) after “(1)(d)" insert “ or (e) ”.

(5)After that subsection insert—

“(5A)The period referred to in paragraph (e) of subsection (1) above is the period—

(a)beginning with the qualifying transfer mentioned in that paragraph, and

(b)ending nine months after the end of the period of account in which that qualifying transfer took place.

For this purpose the period of account means the period of account of the company that established the employee share ownership trust.”.

(6)In section 70 of the M2Finance Act 1989 (chargeable amounts), after subsection (3) insert—

“(4)If the chargeable event falls within section 69(1)(e) above the chargeable amount is an amount equal to—

(a)the amount of the consideration received for the qualifying transfer mentioned in section 69(1)(e) above, less

(b)the amount of any expenditure by the trustees for a qualifying purpose during the period mentioned in section 69(5A) above.”.

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