ERSM91020 - Post Acquisition Benefits from
Securities
Benefits received before 16 April 2003: exemptions
Certain control situations
Per FA88/S80 (1A), (2)(a) & (2)(b), a benefit is not a
special benefit if
- it is received in respect of shares in a
company, which
- is not a dependent subsidiary company, or
- is a dependent subsidiary company which has more
than one class of shares, and
- it is available to at least 90 per cent of
the holders of shares of the same class as that in which the
director or employee acquired shares or an interest in shares,
and
- any of the three following conditions is
satisfied when the benefit is received.
The three conditions, per FA88/S80 (3)(a), (3)(b) &
(3)(c), are as follows.
- The majority of the shares of the same class are held otherwise
than by
- directors or employees of the company
- an associated company
- directors or employees of an associated
company
- The company is employee-controlled by virtue of holdings of
shares of the class in respect of which the benefit is received.
- The company is a subsidiary which is not a dependent subsidiary
and the majority of the shares of the same class are held otherwise
than by
- directors or employees of the company
- an associated company which is not the parent
company, or
- directors or employees of an associated
company.
Employee-controlled company
The charges to Income Tax under Sections 78 and 80 may not bite
if the shares in question are shares in a company which is
employee-controlled by virtue of shares of the class concerned. A
company is employee-controlled by virtue of shares of a particular
class if
- the majority of the company's shares of
that class (except any held by or for the benefit of an associated
company) are held by or for the benefit of
- employees or directors of the company, or
- employees or directors of a company controlled by
the company, and
- those directors and employees are together
able, as holders of the shares, to control the company.
7-year rule
A benefit is only a special benefit if the person who receives
it has been, at some time within the period of seven years ending
with the date the benefit is received, a director or employee of
one of the following companies:
- the company who issued the shares,
the company as a director or employee of which he acquired the
shares, or
- an associated company of either of the
above.
