Introduction Details of the Schedule New Section 226A of ITEPA: Amount treated as earnings
5.New section 226A of ITEPA provides for amounts that are to be treated as earnings in relation to employee shareholder shares. New subsection (1) sets out the circumstances in which this new section applies. New subsection (7) makes clear that certain provisions that affect the market value of shares for other income tax purposes do not apply in determining the market value for the purposes of new subsection (1).
6.New subsections (2) and (3) provide that an amount equal to the market value of the employee shareholder shares, reduced by any payment an employee shareholder is deemed to have made for the shares under new section 226B of ITEPA, is to be treated as earnings of the employee shareholder from the employment for the year in which these shares are acquired.
7.New subsection (4) disapplies this provision for employee shareholder shares acquired pursuant to an employment-related securities option. Instead, the normal rules that apply to shares acquired pursuant to employment-related securities options apply equally for employee shareholder shares so acquired. Any payment an employee shareholder is deemed to have made for the shares under new section 226B of ITEPA is taken into account when calculating any tax chargeable, as set out at paragraphs 12 to 14 of this Schedule.
8.New subsection (5) ensures that if subsection (2) applies, no other sums can constitute earnings from employment in respect of the acquisition of the shares.
9.New subsection (6) provides definitions of various terms used in the new sections 226A to 226D of ITEPA.