The Social Security (Contributions) (Amendment No. 5) Regulations 2003
| Jurisdiction | UK Non-devolved |
2003 No. 2085
SOCIAL SECURITY
The Social Security (Contributions) (Amendment No. 5) Regulations 2003
Made 11th August 2003
Laid before Parliament 11th August 2003
Coming into force 1st September 2003
The Treasury, with the concurrence of the Secretary of State, in exercise of the powers conferred upon them by sections 3(2), 4(6) and (7), 10(9) and 175(3) of the Social Security Contributions and Benefits Act 19921and, with the concurrence of the Department for Social Development, in exercise of the powers conferred upon them by sections 3(2), 4(6) and (7), 10(9) and 171(3) of the Social Security Contributions and Benefits (Northern Ireland) Act 19922, and the Commissioners of Inland Revenue in exercise of the powers conferred upon them by paragraph 6(1) of Schedule 1 to each of those Acts3, make the following Regulations:
Citation and commencement
1. These Regulations may be cited as the Social Security (Contributions) (Amendment No. 5) Regulations 2003 and shall come into force on 1st September 2003.
Interpretation
2. In these Regulations “the principal Regulations” means the Social Security (Contributions) Regulations 20014.
Amendment of the principal Regulations
The principal Regulations are amended as follows.
3. The principal Regulations are amended as follows.
4. In regulation 1(2) (interpretation)—
(a) omit the definition of “convertible shares”;
(b) in the definition of “readily convertible asset” for the words from “section 203F” to the end substitute “section 702 of ITEPA 20035as amended by the Finance Act 2003;”;
(c) after the definition of “regular interval” insert—
““restricted securities” and “restricted interest in securities” have the meanings given in sections 423 and 424 of ITEPA 20036as substituted by the Finance Act 2003;”; and
(d) after the definition of “secondary contributor” insert—
““securities” and “securities option” have the meaning given by section 420 of ITEPA 20037as substituted by the Finance Act 2003;”.
5.—(1) Amend regulation 22 (payment to be treated as earnings)8as follows.
(2) In the heading for “Payment” substitute “Amounts”.
(3) In paragraph (1) for “(2) to (5)” substitute “(2) to (8)”.
(4) For paragraphs (3) to (5) substitute—
“3 The amount specified in this paragraph is the amount equal to the cash equivalent in respect of car fuel which is treated as earnings from the employment of the earner for income tax purposes by virtue of section 149 of ITEPA 2003.
4 The amount specified in this paragraph is the amount which is treated as earnings from the employment of the employed earner by virtue of section 222(2) of ITEPA 20039.
5 The amount specified in this paragraph is the amount which counts as employment income of the employed earner under Chapter 2 of Part 7 of ITEPA 2003 computed in accordance with section 428 of ITEPA 200310in respect of conditional shares or interests in conditional shares acquired before 16th April 2003.
References in this paragraph and paragraph (6) to ITEPA 2003 are to that Act as originally enacted.
6 The amount specified in this paragraph is the amount which counts as employment income of the employed earner by virtue of Chapter 4 of Part 7 of ITEPA 2003 (shares: post-acquisition charges) in respect of shares or interests in shares acquired before 16th April 2003.
7 The amounts specified in this paragraph are those—
(a) which count as employment income of the employed earner in relation to employment-related securities (within the meaning given by section 421B(8) of ITEPA 200311); and
(b) to which section 698 of ITEPA 2003 (PAYE: special charges on employment-related securities)12applies.
References in this paragraph to ITEPA 2003 are to that Act as amended by Schedule 22 to the Finance Act 2003.
8 The amount specified in this paragraph is the amount—
(a) which counts as employment income of the employed earner by virtue of sections 500 to 508 of ITEPA 2003; and
(b) in respect of which income tax is recoverable in accordance with PAYE regulations.”.
6.—(1) Amend regulation 40 (prescribed emoluments in respect of which Class 1A contributions not payable)13as follows.
(2) In the heading, and in paragraph (1), for “emoluments” substitute “general earnings”14.
(3) In each of paragraphs (2) to (6) for “emoluments”—
(a)
(a) where it occurs for the first time substitute “general earnings”; and
(b)
(b) where it occurs for the second time substitute “those”.
(4) For paragraph (4)(b) substitute—
“(b)
“(b) are not removal expenses to which section 271 of ITEPA 2003 applies.”.
(5) Omit paragraph (6)(a).
(6) After paragraph (6) insert—
“6A The general earnings prescribed by this paragraph are those by way of any benefit—
(a) pursuant to a retirement benefits scheme which is not “non-approved” for the purpose of section 387(2) of ITEPA 2003; or
(b) to which section 386 of ITEPA 2003 (charge on payments to non-approved retirement benefits schemes) does not apply by virtue of section 390 of that Act.”.
(7) In paragraph (7)15—
(a)
(a) for the words from the beginning of the paragraph to “by virtue of” substitute—
“The general earnings prescribed by this paragraph are so much of any general earnings as are not charged to income tax as employment income by virtue of;”
(b)
(b) omit sub-paragraphs (b), (d) and (g) to (o); and
(c)
(c) for the words from “Sub-paragraphs (b) and (q) do not” to the end of the paragraph substitute—
“Sub-paragraph (f) applies only to Scotland and sub-paragraph (q) does not apply to Northern Ireland.”.
(8) In paragraph (8) omit the definition of “emolument”.
7.—(1) Amend Schedule 2 (calculation of earnings for the purposes of earnings-related contributions in particular cases) as follows.
(2) In paragraph 5 for “the amount of income likely to be chargeable to tax under Schedule E”, in each place where it occurs, substitute “the amount of general earnings”.
(3) For paragraph 7 and the heading preceding it substitute—
“Convertible and restricted interests in securities and convertible and restricted securities
7. The amount of earnings comprised in any payment by way of the conferment of—
(a) a convertible interest in securities;
(b) a restricted interest in securities; or
(c) an interest in convertible or restricted securities,
falling to be taken into account in computing a person’s earnings from employed earner’s employment shall be computed in the same manner, and shall be taken into account at the same time, as applies under Chapters 1 to 5 of Part 7 of ITEPA 2003, as substituted or inserted by Schedule 22 to the Finance Act 200316, for the purpose of computing his employment income.”.
(4) Omit paragraphs 8 to 10.
(5) For paragraph 11 and the heading preceding it substitute—
“Exercise of a replacement right to acquire shares, obtained as an earner before 6th April 1999
11.—(1) This paragraph applies if—
(a)
(a) an earner obtained, before 6th April 1999, a right to acquire shares in a body corporate;
(b)
(b) the earner subsequently obtained a replacement right (within the meaning given in paragraph 16A(3) of Part 9 of Schedule 317);
(c)
(c) the replacement right is exercised;
(d)
(d) paragraph 11A of this Schedule18does not apply; and
(e)
(e) paragraph 16A of Part 9 of Schedule 3 does not apply because sub-paragraph (4) of that paragraph is not satisfied.
(2) If this paragraph applies, the amount of earnings comprised in any payment realised by the exercise of the replacement right shall be calculated or estimated in accordance with sub-paragraph (3).
(3) The basis for calculating the amount of a gain realised by the exercise of the replacement right shall be the best estimate that can reasonably be made of the amount found as follows.”.
(6) In paragraph 11A(2) after “paragraph 16” insert “or 16A”.
(7) Omit paragraph 12.
8. Amend Schedule 3 (payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions) in accordance with regulations 9 to 13.
9. In Part 1 (introductory), in paragraph 1(5)(d), for “share incentives” substitute “incentives by way of securities”.
10.—(1) Amend Part 3 (payments by way of readily convertible assets which are not disregarded as payments in kind) as follows.
(2) For paragraphs 1 and 2 substitute—
“1. A readily convertible asset within the meaning of section 702 of ITEPA 200319.
2. An asset which, in accordance with section 697 of ITEPA 2003 (PAYE: enhancing the value of an asset), would be treated, for the purposes of section 696 of that Act, as a readily convertible asset.”.
11. In Part 4 (payments by way of specific assets not disregarded as payments in kind)—
(a) for paragraph 1 and the heading preceding it substitute—
“Securities
1. Securities.”;
(b) omit paragraphs 2 to 5;
(c) omit paragraphs 7 and 8; and
(d) in paragraph 11(a) (certificates conferring rights in respect of assets) for “1 to 4” substitute “1”.
12.—(1) Amend Part 9 as follows.
(2) For the heading substitute—
“Incentives by way of securities.”
(3) For paragraph 1 and the heading preceding it substitute—
“Certain payments by way of securities, restricted securities and restricted interests in securities, and gains arising from...
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