Henry II divided the country into（）circuits and appointed tr

正确答案：
(ii) Provision of protection: company or individual
If any of the policies are taken out and paid for by Henry personally, then there will be no tax relief on the premiums,
but neither will there normally be any tax payable on the proceeds or benefits received.
If Happy Home Ltd were to pay the premiums on a policy taken out by Henry, and of which he was the direct beneficiary,
then this will constitute a benefit, on the grounds that the company will have satisfied a personal liability of Henry’s.
Accordingly, income tax and Class 1A national insurance contributions will be payable on the benefit.
If, however, Happy Home Ltd were to decide to offer protection benefits to their employees on a group basis (and not
just to Henry), then it would be possible to avoid a charge under the benefits rules and/or obtain a lower rate of premium
under a collective policy. For example:
– A death in service benefit of up to four times remuneration can be provided as part of an approved pension scheme.
No benefit charge arises on Henry and any lump sum will be paid tax free. This could be considered a substitute
for a term assurance policy.
– If a group permanent health insurance policy were taken out, no benefit charge would arise on Henry, but any
benefits payable under the policy would be paid to Happy Home Ltd in the first instance. When subsequently paid
on to Henry, such payments would be treated as arising from his employment and subject to PAYE and national
insurance as for normal salary payments.
– If a group critical illness policy were taken out, again no benefit charge would arise on Henry, but in this case also,
any benefits received by Henry directly from Happy Home Ltd as a result of the payments under the policy would
be considered as derived from his employment and subject to income tax and national insurance. Such a charge
to tax and national insurance would however be avoided if these payments were made in terms of a trust.

标准答案:B

正确答案：A

正确答案：
(ii) Exercising of share options
The share option is not part of an approved scheme, and will not therefore enjoy the benefits of such a scheme. There
are three events with tax consequences – grant, exercise and sale.
Grant. If shares or options over shares are sold or granted at less than market value, an income tax charge can arise on
the difference between the price paid and the market value. [Weight v Salmon]. In addition, if options can be exercised
more than 10 years after the date of the grant, an employment income charge can arise. This is based on the market
value at the date of grant less the grant and exercise priced.
In Henry’s case, the options were issued with an exercise price equal to the then market value, and cannot be exercised
more than 10 years from the grant. No income tax charge therefore arises on grant.
Exercise. On exercise, the individual pays the agreed amount in return for a number of shares in the company. The price
paid is compared with the open market value at that time, and if less, the difference is charged to income tax. National
insurance also applies, and the company has to pay Class 1 NIC. If the company and shareholder agree, the national
insurance can be passed onto the individual, and the liability becomes a deductible expense in calculating the income
tax charge.
In Henry’s case on exercise, the difference between market value (￡14) and the price paid (￡1) per share will be taxed
as income. Therefore, ￡130,000 (10,000 x (￡14 – ￡1)) will be taxed as income. In addition, national insurance will
be chargeable on the company at 12·8% (￡16,640) and on Henry at the rate of 1% (￡1,300).
Sale. The base cost of the shares is taken to be the market value at the time of exercise. On the sale of the shares, any
gain or loss arising falls under the capital gains tax rules, and CGT will be payable on any gain. Business asset taper
relief will be available as the company is an unquoted trading company, but the relief will only run from the time that
the share options are exercised – i.e. from the time when the shares were acquired.
In Henry’s case, the sale of the shares will immediately follow the exercise of the option (6 days later). The sale proceeds
and the market value at the time of exercise are likely to be similar; thus little to no gain is likely to arise.