CH 28 - Corporation Tax Deductions for Share Schemes

Question 1

Under Part 12 CTA 2009
When and How is based deduction for the cost of share schemes & share option plans for companies?

Answer 1

• The deduction is given in the accounting period in which the employee gets a beneficial interest in the shares.
• The deduction is based on the (potential) income tax charge on the employee, so
• • the difference between the MV of the shares and the consideration given by the employee.
• The deduction can only be claimed if the employee actually acquires shares, and it can only be claimed once in relation to one share acquisition.
• A deduction is available for shares received from a trust which do not meet the qualifying conditions of CTA 2009, Part 12.

Question 2

Does cost of establishing a share/share option scheme qualify for companies as a deduction?

Answer 2

Generally, the cost of establishing a share/share option scheme will not qualify for a deduction unless the scheme is a (SAYE) Save As You Earn Scheme or a (CSOP) Company Share Option Plan.

Question 3

What deductions are given for share issued under a SIP under Part 11 CTA 2009?

Answer 3

under Part 11 CTA 2009 for shares issued under a SIP;
- cost of providing free or matching shares
- additional cost of partnership shares
- cost of setting up a sip
- running cost of the plan (excl. trustees’ expenses in acquiring shares)

Question 4

What criteria must share acquired in a way of employment meet for the company to claim relevant cost?

Answer 4

• must be part of the company’s ordinary share capital
• must be fully paid na not redeemable
• They must be;
• > shares of a class listed on a recognised stock exchange; or
• > shares in a company which is not controlled by another company; or
• shares in a subsidiary of a listed company.

The share must be in ;
- the employeing company
- the parent of the employing company
- or a consortium member where the employing company or its parent is the consortium company.