Income Tax (Earnings and Pensions) Act 2003 section 79

Meeting by trustees of PAYE obligations

Section 79 requires that a Share Incentive Plan must include provisions enabling trustees to meet any PAYE obligations that arise when a participant's shares leave the plan.

• When shares cease to be subject to the plan and a PAYE liability arises, the plan must give trustees a mechanism to discharge that liability
• Trustees can meet the obligation by disposing of the shares that have left the plan, by disposing of the participant's remaining plan shares, or by requiring the participant to pay the trustees the amount needed
• Disposing of shares for this purpose includes the trustees acquiring the shares into the trust, not only selling them to third parties
• A disposal of remaining plan shares to meet a PAYE obligation can itself trigger further tax charges on free, matching, partnership, or dividend shares leaving the plan