BIM44390 - Specific deductions - employee share schemes: Providing shares under FA03/SCH23 - other restricted shares from1/9/2003 - example

1/4/2004

Employee is given 1000 shares, subject to restrictions that the employee cannot sell the shares within the next 3 years

Market value of shares if unrestricted

£1000

Risk of forfeiture reduces their MV by 20% to

£800

1/4/2007

Risk of forfeiture expires

Market value of shares (now unrestricted) is

£2000

2003/04

Income tax charged on

£800

2006/07

Income tax charged on £2000 x 20% =

£400

a.p.e 31/12/04

Deduction

£800

a.p.e 31/12/07

Deduction

£400