BIM44135 - Specific deductions - employee share schemes: Contributions to QUESTs, a/c periods starting before 1 Jan 2003 - costs of setting up qualifying trusts

The expenditure a company incurs on or after 1 April 1991 in setting up a qualifying employee share ownership trust (see BIM44090) is allowable in computing trading profits or, if the company is an investment company, as expenses of management (ICTA88/S85A).

The expenditure is normally allowable for the accounting period in which the expenditure is incurred. However where the trust is established (that is when the trust deed is executed) more than nine months after the end of that period, the expenditure should be:

• disallowed in the period of payment,
• allowed in the period in which the trust is established.

This is intended to ensure that it is not necessary to keep assessments open where there is a delay in executing the trust deed.

Other trusts

This specific relief under ICTA88/S85A only applies if the trust is a qualifying trust under FA89/SCH5.

Guidance on deductions for expenditure incurred in setting up other employee share ownership trusts is at BIM44020.