BIM44300 - Specific deductions: Employee share schemes: periods starting on or after 1 January 2003: providing shares under FA03/SCH23: which company gets the deduction
With one exception, deductions under FA03/SCH23 are given to the “employing company”.
The exception is where the deduction is given to a “successor company” in the same group as the employing company, following the transfer of a business within the group (FA03/SCH23/PARA23).
The employing company
The employing company is:
- for shares acquired through share awards (not through share options) – the company by reason of employment with which the shares were awarded to the employee;
- for shares acquired through share options – the company by reason of employment with which the share options were first granted;
- for shares acquired through “replacement options” – the company by reason of employment with which the original options were granted.
Replacement options
Following the takeover of a company whose shares are the subject
of share options held by employees, there may be arrangements under
which the employees exchange their existing options for options
over shares in the acquiring company (the new “parent
company”). This is commonly called a rollover of options and
the new options are described in FA03/SCH23 as “replacement
options”.
If, following a takeover, options are rolled over and
replaced by options over shares in the new parent company,
deductions under FA03/SCH23 will continue to be available to the
employing company if the shares in the new parent company are
“qualifying shares”, see
BIM44285.
A successor company
The exception to the general rule that deductions under
FA03/SCH23 are given to the “employing company” is
where the business (or substantially all of it), for the purposes
of which the shares were awarded or share options were granted, is
transferred to another company or companies in the employing
company’s group (a “successor company”) between
the date of the award / grant and a later relief-triggering event.
In these circumstances deductions under FA03/SCH23 are given
to the successor company (FA03/SCH23/PARA23).
