Finance Act 1998

2(1)The section 171(4) limit applicable to any profit-related pay paid to the employee in accordance with the affected scheme and by reference to the relevant period shall be—

(a)if the relevant period does not begin for the employee before the apportionment date, the limit for the part of the profit period falling on or after that date; and

(b)in any other case the sum of—

(i)the limit for the part of the relevant period falling on or after the apportionment date; and

(ii)the limit for the part of the relevant period falling before that date.

(2)For the purposes of sub-paragraph (1) above the limit for a part of the relevant period shall be computed by—

(a)taking the amount given by virtue of section 61 of the [1997 c. 16.] Finance Act 1997 (phasing out of relief for profit-related pay) as the section 171(4) limit for a profit period beginning with the first day of that part of that period and ending with the last day of that part of that period;

(b)making a proportionate reduction for so much of that part of that period (if any) as is not included in any period by reference to which the employee is eligible for profit-related pay in accordance with the affected scheme; and

(c)using—

(i)the amount produced by the reduction, or

(ii)(if no reduction has been made) the amount taken in accordance with paragraph (a) above,

as the limit for that part of the relevant period.

(3)Subject to sub-paragraph (4) below, the apportionment date in the case of any employee is for the purposes of this paragraph—

(a)except where the person who is the scheme employer for the affected scheme otherwise elects by notice to that employee, the 1st January that falls next after the first day of the relevant period; and

(b)where that person does so elect, the date which is the relevant anniversary for the purposes of whichever of sub-paragraphs (2) and (3) of paragraph 1 above applies to the relevant period in the employee’s case.

(4)Where—

(a)both sub-paragraphs (2) and (3) of paragraph 1 above apply to the relevant period in the employee’s case, or

(b)there is, for any other reason, more than one date which (but for this sub-paragraph) would be taken in accordance with sub-paragraph (3)(b) above to be the apportionment date,

the apportionment date shall be the earliest of those dates to fall in the calendar year immediately following that in which the first day of the relevant period falls.