BIM44275 - Specific deductions - employee share schemes: Providing shares under FA03/SCH23, , a/c periods from 1 Jan 2003 - how the relief is given

The way that the relief under FA03/SCH23 is given depends on the nature of the business, carried on by the employing company, for the purposes of which the share options were granted or share awards were made:

• for trades and Schedule A businesses - the amount of the relief is allowed as a deduction in computing the profits taxable under Schedule D Case I or Schedule A;
• for a business carried on by an investment company - the amount of the relief is treated as disbursed as management expenses under ICTA88/S75;
• for a life assurance business carried on by an insurance company - the amount of the relief is included among the amounts the company may treat as part of its management expenses under ICTA88/S76.

More than one business

If the share options were granted or share awards made for the purposes of more than one business carried on by the employing company (for example a trade and a Schedule A business), the amount of the deduction is apportioned between them on a just and reasonable basis (FA03/SCH23/PARA9 and PARA16).

The precise basis on which the relief is apportioned between the different businesses in computing the taxable profits from each for the accounting period concerned will only be relevant in practice if there are different rules for setting off any losses from the different businesses.