Section 501 — Income Tax (Earnings and Pensions) Act 2003: Charge on capital receipts in respect of plan shares

Charge on capital receipts in respect of plan shares 501 1 This section applies if conditions A and B are met.

2 Condition A is that a capital receipt is received by a participant in respect of, or by reference to, any of the participant’s plan shares.

3 Condition B is that the plan shares in respect of, or by reference to, which the capital receipt is received are—

a free, matching or partnership shares that were awarded to the participant less than 5 years before the participant received the capital receipt, or b dividend shares that were acquired on behalf of the participant less than 3 years before the participant received the capital receipt.

4 If this section applies, the amount or value of the capital receipt counts as employment income of the participant for the relevant tax year.

5 The “ relevant tax year ” is the tax year in which the participant receives the capital receipt.

6 This section does not apply if the capital receipt is received by the participant’s personal representatives after the death of the participant.

7 Section 502 explains what is meant by a “capital receipt”.