Corp Tax - Chapter 28

Question 1

Statutory deduction

Answer 1

the difference between market value and the consideration given (if any)
where shares are awarded to employees

the difference between market value and the consideration given where there has been the exercise of a share option

Question 2

When is relief given?

Answer 2

The company’s deduction is given against its profits for the accounting period in
which the employee acquires the shares.

Question 3

Conditions

Answer 3

• They must be part of the company’s ordinary share capital.
• They must be fully paid up and 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.

Question 4

deduction is given for shares issued under a SIP.

Answer 4

cost of providing free or matching shares,

additional cost of partnership shares

cost of setting up SIP

The running costs of the plan can be claimed under the normal wholly and exclusively principles.

Question 5

Is the cost of setting up a share scheme allowable?

Answer 5

Generally, the cost of establishing a share scheme is capital and will not qualify for a deduction unless it is a SAYE plan or a CSOP. C