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1. This clause authorises the Board of Inland Revenue to withdraw approval from profit sharing schemes where appropriations are made under the scheme in the same year as free shares are appropriated under an all-employee share plan introduced by Clause 47.

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DETAILS OF THE CLAUSE

 

2. Subsection (1) introduces into the profit sharing scheme legislation in Schedule 9 of the Taxes Act new grounds for withdrawing approval from a scheme. The withdrawal of approval may be made when free shares are appropriated under a profit sharing scheme approved under that Schedule if, in the same tax year, free shares have already been awarded under the new all-employee plan.

3. Subsection (2) explains that the rules apply to a plan introduced by Clause 47 above, operated by that company or a company associated with that company.

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BACKGROUND NOTE

4. The new all-employee share ownership plan introduced by Clause 47 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 scheme. That is why clause 49 has been introduced to phase out the old scheme. No more approvals will be given after 5 April 2001, and no shares may be appropriated after 5 April 2002.

5. The new employee share ownership plan allows companies to give free shares to employees just as in the approved profit sharing scheme, so this clause prevents companies allocating shares under both arrangements in the same tax year.

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