Taxes Consolidation Act 1997 section 516

Assessment of trustees in respect of sums received

Section 516 provides for the tax treatment of trustees and participants where shares in an approved profit sharing scheme are transferred before the release date.

• Where a participant directs the trustees to transfer shares before the release date and the trustees receive a sum equal to income tax at the standard rate on the appropriate percentage of the shares' locked-in value, the trustees are chargeable to income tax under Case IV of Schedule D on that amount.
• The participant must pay the trustees income tax at the standard rate on the appropriate percentage of the locked-in value of the shares at the time of the direction.
• The amount on which the participant is charged to income tax as a result of the transfer is treated as an amount from which income tax has been deducted at the standard rate, giving the participant credit for the tax paid by the trustees.
• The chargeable amount is effectively treated as an annual payment subject to tax deduction at source, ensuring that the tax obligation is shared between the trustees and the participant.