Section 996: Shares excluded from sections 994 and 995
2562.This section identifies the shares that do not qualify for relief if they are awarded as free, matching or partnership shares. It is based on paragraphs 4, 6 and 9 of Schedule 4AA to ICTA.
2563.Exclusion 1 is similar to the exclusion in section 992(2). It requires the employee to whom the shares are awarded to be within the charge to income tax on any earnings from the employment in respect of which the shares were awarded. Generally, it has the effect of excluding any shares awarded to non-UK resident employees.
2564.Exclusion 2 is intended to protect the employee by acting as a disincentive to the award of shares that are intended to reduce in value.
2565.Exclusion 3 applies if the company or an associated company operates another share scheme, including another SIP, and has already had a deduction for the cost of providing the shares for use by that scheme. As shares are not identifiable individually, rules are needed to identify when the shares included in an award were acquired. Subsection (6)(b) identifies whether shares included in an award have already had relief under another SIP or share scheme.