5(1)The provisions of this Part of this Schedule apply in the case of an award of shares.U.K.
[F1(2)Where the shares acquired are restricted shares, the provisions of this Part have effect subject to the provisions of Part 4 of this Schedule.
(3)Where the shares acquired are convertible shares, the provisions of this Part have effect subject to the provisions of Part 4A of this Schedule.]
Textual Amendments
F1Sch. 23 para. 5(2)(3) substituted for Sch. 23 para. 5(2) (with effect in accordance with Sch. 22 paras. 68(2), 69(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 61; S.I. 2003/1997, art. 2
6(1)The shares acquired must be shares in—U.K.
(a)the employing company; or
(b)a company that, at the time of the award, is a parent company in relation to the employing company; or
(c)a company that, at the time of the award, is a member of a consortium that owns the employing company or a company within paragraph (b); or
(d)where at the time of the award the employing company or a company within paragraph (b) is a member of a consortium that owns another company (C), a company that at that time—
(i)is a member of the consortium or a parent company in relation to a member of the consortium, and
(ii)is also a member of the same commercial association of companies as C.
7(1)It must be the case that the employee—U.K.
(a)is subject to a charge to income tax under the Income Tax (Earnings and Pensions) Act 2003 (c. 1) in respect of the award, or
(b)would be subject to such a charge if the conditions specified in sub-paragraph (2) were met.
(2)The conditions mentioned in sub-paragraph (1)(b) are—
(a)that the employee was resident and ordinarily resident in the United Kingdom at all material times, and
(b)that the duties of the employment by reason of which the award was made were performed in the United Kingdom at all material times.
[F2(3)It must be the case that section 446UA of the Income Tax (Earnings and Pensions) Act 2003 does not operate in relation to the shares.]
Textual Amendments
F2Sch. 23 para. 7(3) inserted (with effect in accordance with Sch. 2 para. 20(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 2 para. 20(2)
8(1)The amount of the relief is equal to the difference between—U.K.
(a)the market value of the shares at the time of the award, and
(b)the total amount or value of any consideration given, by the recipient or another, in respect of the shares.
(2)The consideration mentioned in sub-paragraph (1)(b) does not include the performance of any duties of, or in connection with, the employee’s employment with the employing company.
(3)A just and reasonable apportionment shall be made for the purposes of this paragraph of any consideration given partly in respect of the shares and partly in respect of other matters.
(4)If the award was made partly for the purposes of a business meeting the requirements of paragraph 3 (business must be within the charge to corporation tax) and partly for the purposes of a business in relation to which those requirements are not met, the amount of the relief shall be reduced to such extent as is just and reasonable.
9(1)The amount of the relief is allowed as a deduction in computing for the purposes of corporation tax the profits of the business for the purposes of which the award was made.U.K.
[F3(2)If the company carrying on that business is a company with investment business, the amount of the relief is treated as expenses of management for the purposes of section 75 of the Taxes Act 1988.]
[F4(3)If the company carrying on that business is an insurance company carrying on life assurance business, the amount of the relief shall be treated as expenses payable falling to be brought into account at Step 1 in section 76(7) of the Taxes Act 1988.]
(4)If the award was made for the purposes of more than one business within the charge to corporation tax, the amount of the deduction must be apportioned between them on a just and reasonable basis.
Textual Amendments
F3Sch. 23 para. 9(2) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 69(2)
F4Sch. 23 para. 9(3) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 69(3)
10(1)The relief is given for the accounting period in which the recipient acquires the shares.U.K.
(2)The time when the shares are acquired is when the recipient acquires a beneficial interest in the shares and not, if different, the time the shares are conveyed or transferred.