Taxation of Chargeable Gains Act 1992 Schedule 7D paragraph 6

Deemed disposal by trustees on disposal of beneficial interest

Section 6 of Schedule 7D deals with the tax consequences when a participant in a Share Incentive Plan (SIP) disposes of their beneficial interest in shares held by the plan trustees, and the circumstances in which certain transfers are not treated as disposals.

• When a participant disposes of their beneficial interest in SIP shares, the trustees are treated as having disposed of those shares for the same consideration received for the beneficial interest.
• Transfers of the beneficial interest arising from the participant's insolvency or by operation of law (in England, Wales or Northern Ireland), or to a judicial factor or trustee in sequestration (in Scotland), are not treated as disposals.
• If the disposal is not at arm's length, the proceeds are deemed to equal the market value of the shares at the time of the disposal.
• These rules apply specifically for the purposes of the SIP code, ensuring that disposals of beneficial interests are taxed consistently with direct disposals of the underlying shares.