BIM44465 - Specific deductions - employee share schemes: Providing “non-qualifying” shares, a/c periods from 1 Jan 2003 - new shares issued direct to employees

Guidance on deductions for issuing new shares direct to employees during accounting periods starting before 1 January 2003 is at BIM44240.

The same principles apply to employing companies who issue “non-qualifying shares” (which do not qualify for relief under FA03/SCH23) direct to their employees for accounting periods starting on or after 1 January 2003.

In the unlikely event that:

• an employing company grants discounted share options over its own shares, and
• those shares are "non-qualifying shares”, and
• the share options, if and when exercised, will be satisfied by the company issuing new shares direct to the employees,

any deduction in the company’s profit and loss account made under UITF17 (see BIM44180) should be added back in computing the employer’s profits taxable under Schedule D Case I or Schedule A.