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1. This clause authorises the phasing out of the approved profit sharing scheme. No new schemes will be approved after 5 April 2001 unless the application for approval is received with full accompanying details on or before that date. Income tax relief will be withdrawn for shares appropriated to employees after 5 April 2002. (*Rev3)

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DETAILS OF THE CLAUSE

2. Subsections (1) & (2) direct that the Board of Inland Revenue shall not approve a profit sharing scheme unless the application is received, in writing, including such particulars and evidence as the Board requires, before 6 April 2001.

3. Subsection (3) provides that to benefit from tax reliefs, appropriations under approved profit sharing schemes must be made before 6 April 2002.

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BACKGROUND NOTE

 

4. The approved profit sharing scheme has been in existence for over 20 years, and while it has been popular with many companies, others considered it did not meet the needs of their business and needed to be more flexible. Clause 47 and Schedule 8 of this Bill introduce a new all-employee share ownership plan which includes many features from the existing approved profit sharing scheme. The new plan is also more flexible and has more tax advantages than the existing approved profit sharing scheme. For this reason it it has been decided to phase out the old scheme.

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