Taxation of Chargeable Gains Act 1992 Schedule 7D paragraph 4

Different classes of shares

Schedule 7D paragraph 4 deals with how shares held within a Share Incentive Plan (SIP) are classified separately from other shares of the same type for capital gains tax purposes, ensuring that plan shares and non-plan shares are not pooled together.

• A participant's SIP shares are treated as a different class from otherwise identical shares that are not held within the plan, for as long as those shares remain subject to the plan.
• Shares transferred to plan trustees via a qualifying transfer (from an employee share ownership trust) but not yet awarded to participants are treated as a separate class from other trustee-held shares not received through a qualifying transfer.
• Shares acquired by trustees using funds for which the company received a tax deduction for contributions to the plan trust, but not yet awarded under the plan, are likewise treated as a different class from other trustee-held shares.
• These classification rules override the normal share identification and pooling rules in Chapter 1 of Part 4 of the Taxation of Chargeable Gains Act 1992, preventing SIP shares from being mixed with non-SIP shares of the same company.