BIM44250 - Measuring the profits (specific rules & practices) - receipts & deductions: specific deductions - employee share schemes: providing shares to employees, a/c periods from 1 Jan 2003 - introduction
For accounting periods beginning on or after 1 January 2003 deductions for providing shares to employees fall into the following categories:
- Providing shares through Share Incentive Plans (SIP) approved under ICTA88/SCH4AA (previously FA00/SCH8), see BIM44255.
- Providing shares which are ‘qualifying shares’ under FA03/SCH23 (other than through a SIP), see BIM44260.
- Providing ‘non-qualifying shares’, see BIM44450.
‘Qualifying shares’ for this purpose are those which meet the qualifying conditions for a statutory CT deduction under FA03/SCH23. These are shares which give the employees a real stake in the company or group by which they are employed. Full details of the qualifying requirements in FA03/SCH23 are at BIM44285.
In practice it is reasonable to assume that shares provided under HMRC-approved schemes (see BIM44010) will be ‘qualifying shares’ under FA03/SCH23. The qualifying conditions in FA03/SCH23 are very similar to those for shares which can be provided under HMRC-approved schemes.
Shares provided under unapproved schemes (see BIM44005) may also be ‘qualifying shares’ under FA03/SCH23.
The following are not qualifying shares under FA03/SCH23:
- Partly-paid shares.
- Redeemable shares.
- Preference shares.
- Unlisted shares in a subsidiary company (unless its parent company is a listed and non-close company).
- Shares in a company which is not sufficiently linked to the employing company at the date the employee acquires the shares, or at any earlier date on which the employee was given a right (such as a share option) to acquire the shares.