Taxes Consolidation Act 1997 section 511

The period of retention, release date and appropriate percentage

Section 511 defines the retention period, the release date, and the appropriate percentage for the purposes of an approved profit sharing scheme (APSS), and sets out the obligations imposed on participants during the retention period.

• The retention period runs from the date shares are appropriated to the participant until the earlier of two years later, or the date the participant leaves employment due to injury, disability or redundancy, reaches pensionable age, or dies. The release date is the third anniversary of the appropriation date, after which shares may be disposed of free of income tax.
• If shares are disposed of between the end of the retention period and the release date, income tax is charged on the appropriate percentage of the locked-in value (or the sale proceeds if lower): 100% in most cases, but reduced to 50% where the participant has left employment due to injury, disability or redundancy, or has reached pensionable age.
• No scheme may be approved unless each participant agrees to leave the shares with the trustees for the retention period, not to dispose of his or her interest in the shares during that period, to pay income tax at the standard rate on the locked-in value if directing an early transfer, and not to instruct the trustees to sell the shares before the release date other than for the best obtainable consideration.
• These restrictions are relaxed to allow participants to direct the trustees to accept share-for-share exchanges, takeover offers, or arrangements affecting all ordinary shareholders, and after the retention period to sell their beneficial interest back to the trustees at market value.