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STATUTORY INSTRUMENTS
1991No. 733
INCOME TAX
The Personal Equity Plan (Amendment) Regulations 1991
Made
19th March 1991
Laid before the House of Commons
19th March 1991
Coming into force
6th April 1991
The Treasury, in exercise of the powers conferred on them by section
333 of the Income and Corporation Taxes Act 1988[1]
and section 149D of the Capital Gains Tax Act 1979[2]
, hereby make the following Regulations:
Citation and commencement 1. These Regulations may be cited as the Personal Equity Plan
(Amendment) Regulations 1991 and shall come into force on 6th April
1991.
Interpretation 2. In these Regulations"the principal Regulations"
means the Personal Equity Plan Regulations 1989[3]
and, unless the context otherwise requires,"regulation"
means a regulation of those Regulations.
Amendments to the principal Regulations
3. In regulation 2(1)(a) the definition of"the 1986 Regulations"
and the semi-colon preceding it shall be omitted.
(a) in paragraph (1) the words"(subject to regulation 10)"
shall be omitted;
(b) in paragraph (3)(a) for"30"
there shall be substituted"42"
.
5. In regulation 5—
(a) for paragraph (3) there shall be substituted—
" (3) A plan investor's cash subscription and any other cash held by a
plan manager under a plan shall be held only in sterling and be
deposited in an account with a deposit-taker or a building society which
is designated for the purposes of these Regulations only."
;
(b) in paragraph (5) after the words"regulation 6(3)(b)"
there shall be inserted the words", or in paired shares,"
and for the words"and investment trusts"
there shall be substituted the words", investment trusts and paired shares"
.
6. In regulation 6—
(a) in paragraph (2)[5]
after sub-paragraph (b) there shall be inserted—
"(ba) subject to the condition specified in paragraph (3)(a),
investments in units comprising shares issued by a body corporate
incorporated in the United Kingdom which are paired with shares issued
by a body corporate which is not so incorporated ("paired shares"
);"
.
(b) in paragraph (3)(a)[6]
for the words"and investment trusts"
there shall be substituted the words", investment trusts and paired shares"
;
(c) in paragraph (4)[7]
for"£900"
there shall be substituted the words"one quarter of the subscription limit"
.
(d) after paragraph (4) there shall be added—
" (5) For the purposes of this regulation, shares issued by a body
corporate incorporated in the United Kingdom ("the UK company"
) are paired with shares in a body corporate which is not so
incorporated ("the foreign company"
) where—
(a) the articles of association of the UK company and the equivalent
instruments governing the foreign company each provide that no share in
the company to which they relate may be transferred otherwise than as
part of a unit comprising one share in that company and one share in the
other; and
(b) such units have been offered for sale to the public in the United
Kingdom and, at the same time, other such units have been offered for
sale to the public at a broadly equivalent price in the country in which
the foreign company is incorporated."
(a) in paragraph (1) for the words"in accordance with the condition in paragraph (2)(b)"
there shall be substituted the words"with the proceeds of sale of those investments"
;
(b) for paragraph (2)(b)[8]
there shall be substituted—
"(b) that the total amount of the cash subscription to the plan for
the year ending 5th April 1991 which was invested in non-qualifying
investments on that date did not exceed £900;
(c) that the total amount of the cash subscription to the plan invested
in authorised unit trusts, funds of funds and investment trusts in any
year beginning after 5th April 1991 does not exceed one quarter of the
subscription limit."
8. In regulation 7(2)(b) the words"(subject to regulation 10)"
shall be omitted.
9. Regulation 10 shall be omitted.
10.—(1) Regulation 17 shall be renumbered as paragraph (1) of that
regulation.
(2) In regulation 17—
(a) in paragraph (1) the words from", except interest"
to"for his benefit"
shall be omitted.
(b) after paragraph (1) there shall be added—
" (2) Interest on a cash deposit which is a plan investment—
(a) where the cash is deposited in an account with a deposit-taker,
shall be paid or credited gross and the deposit shall not be treated as
a relevant deposit within the meaning of section 481(4) of the Income
and Corporation Taxes Act 1988[9]
, and
(b) where the cash is deposited in an account with a building society,
shall be treated as a gross payment to which regulation 4 of the Income
Tax (Building Societies) (Dividends and Interest) Regulations 1990[10]
applies."
11. After regulation 17 there shall be inserted—
"Interest on cash deposits paid to plan investor 17A.—(1) When in any year an amount of interest paid or credited
in respect of a cash deposit which is a plan investment—
(a) is paid by the plan manager to or at the direction of the plan
investor or otherwise applied for his benefit, and
(b) the aggregate of that amount and of all other amounts so paid in the
year exceeds £180,
paragraph (2) shall apply.
(2) Where this paragraph applies—
(a) the plan manager shall pay to the Board a sum representing income
tax at the basic rate in force for the year on—
(i) all amounts paid in that year before this paragraph first applies,
and
(ii) the amount referred to in paragraph (1) and each further amount paid
in that year;
(b) any sum so payable shall be treated as an amount of tax due under an
assessment which is final and conclusive and payable, in the case of the
sum payable in respect of the amounts referred to in sub-paragraph
(a)(i), not later than 30 days after the date on which this paragraph
first applies in any year and, in any other case, not later than 30 days
after payment of the amount referred to in paragraph (1);
(c) the interest referred to in paragraph (1) shall be treated in all
other respectsas interest of money within the meaning of paragraph (a)
of Case III ofSchedule D in section 18(3) of the Taxes Act and
chargeable to tax under that Case for the year in which it arises.
(3) The reference to interest in paragraph (1) includes a reference to
any bonus and to a dividend paid or credited in respect of a share
account with a building society."
12. In regulation 18(3) after paragraph (a) there shall be
inserted—
"(aa) any sum representing income tax which is payable under
regulation 17A on amounts of interest paid or credited gross and paid by
the plan manager to or at the direction of the plan investor or
otherwise applied for his benefit;"
.
Greg Knight
Nicholas Baker
Two of the Lords Commissioners of Her Majesty's Treasury
These Regulations, which come into force on 6th April 1991, further
amend the Personal Equity Plan Regulations 1989 ("the principal Regulations"
). The principal effects of the Regulations are to remove the
requirement that cash held by a plan manager in an account with a
deposit-taker or building society be held in circumstances where, in the
case of an account with a deposit-taker, the deposit-taker is liable to
account for composite rate tax on interest payments or, in the case of
an account with a building society, the reduced rate amount payable by
the society includes an amount calculated by applying the reduced rate
to interest payments; to authorise the holding of paired shares as plan
investments subject to the same restrictions as apply to unit trusts,
funds of funds and investment trusts; to increase the amount that may be
invested in authorised unit trusts, funds of funds and investment trusts
which do not satisfy the requirements of regulation 6 of the principal
Regulations to £1,500; and to remove the relaxation of the
subscription conditions in relation to rights issues. The requirements as to the holding of cash deposits is replaced
by provisions that interest on a cash deposit which is a plan investment
is to be paid gross and that, if the plan manager makes payments of
interest in excess of
£180 in any year to or at the direction of the plan investor, he
is to deduct, and account to the Commissioners of Inland Revenue ("the Board"
) for, income tax at the basic rate on the amount of all such
payments in the year. The Regulations also make a number of minor amendments and
corrections to the drafting of the principal Regulations.
Regulation 1 provides for citation and commencement. Regulation 2 contains definitions. Regulation 3 omits a redundant definition from regulation 2(1)(a) of
the principal Regulations. Regulation 4 amends regulation 4 of the principal Regulations by
extending the time within which shares allotted or allocated following a
public offer are to be transferred to a plan from 30 to 42 days. Regulation 5 amends the requirements in regulation 5(3) of the
principal Regulations which are to be satisfied when a plan manager
holds cash in an account with a deposit-taker or building society. Regulation 6 adds units comprising paired shares to the list of
qualifying investments in regulation 6 of the principal Regulations
subject to the condition referred to above and increases the amount
which may be invested in authorised unit trusts, funds of funds and
investment trusts which do not satisfy the requirements of that
regulation to £1,500. Regulation 7 amends regulation 6A(2) and adds a further rule
applying after 5th April 1991 to plans in which non-qualifying
investments were held on 5th April 1990. Regulation 8 makes an amendment to regulation 7 of the principal
Regulations which is consequent on regulation 9. Regulation 9 omits regulation 10 of the principal Regulations. Regulation 10 amends regulation 17 of the principal Regulations and
provides that interest paid on a cash deposit with a deposit-taker or
building society which is a plan investment is to be paid gross. Regulation 11 inserts a new regulation 17A in the principal
Regulations the effect of which is that, where a plan manager pays
interest received by him on a cash deposit which is a plan investment to
or at the direction of the plan investor, and the aggregate of such
payments in any year exceeds £180, he is to account to the Board
for basic rate tax on all such payments in the year. Regulation 12 makes an amendment to regulation 18(3) of the
principal Regulations which is consequent on the new regulation 17A.
[2] 1979 c. 14;section 149D was inserted by paragraph 26 of
Schedule 29 to the Income and Corporation Taxes Act 1988 and amended
by section 116 of the Finance Act 1988 (c. 39). back