Part 12Other relief for employee share acquisitions

Chapter 1Introduction

Introductory

1001Overview of Part

1

This Part provides for corporation tax relief in relation to employee share acquisitions.

2

Sections 1002 to 1005 relate to the interpretation of this Part.

3

Chapter 2 provides for relief if shares are acquired by an employee or another person because of the employee's employment by a company.

4

Chapter 3 provides for relief if—

a

an employee or another person obtains an option to acquire shares because of the employee's employment by a company, and

b

shares are acquired pursuant to the option.

5

Chapter 4 provides for additional relief in cases involving restricted shares.

6

Chapter 5 provides for additional relief in cases involving convertible shares or convertible securities that are not shares.

7

Chapter 6 deals with the relationship between the reliefs under this Part and other reliefs.

Interpretation

1002“Employment”

1

This section explains how references in this Part to employment (and related expressions) are to be read.

2

“Employment” includes a former or prospective employment.

3

References to employment by a company include references to holding an office with that company.

4

Members of a company whose affairs are managed by its members are treated as holding an office with the company.

1003“Shares” etc

1

In this Part “shares” includes—

a

an interest in shares, and

b

stock or an interest in stock.

2

For the purposes of this Part shares are acquired by a person when the person acquires a beneficial interest in them (and not, if different, when they are conveyed or transferred).

1004Groups, consortiums and commercial associations of companies

1

This section applies for the purposes of this Part.

2

Two companies are members of the same group if one is a 51% subsidiary of the other or both are 51% subsidiaries of a third company.

3

“Group transfer” means a transfer of a business, or a part of a business, from one company that is a member of a group to another company that is, or two or more companies that are, members of the group.

4

A company is a parent company of another company if that other company is its 51% subsidiary.

5

A company (“the consortium company”) is owned by a consortium if—

a

five or fewer companies (“the shareholding companies”) between them beneficially own at least 75% of the consortium company's ordinary share capital, and

b

each of the shareholding companies beneficially owns at least 10% of that capital.

6

Each shareholding company is a member of the consortium.

7

For the purposes of subsection (5) the shareholdings of members of a group of companies are to be treated as held by a single company.

8

And, in such a case, a member of the group of companies is a member of the consortium if the member beneficially owns some of the consortium company's ordinary share capital.

9

“Commercial association of companies” means a company together with such of its associated companies (as defined in section 416 of ICTA) as carry on businesses that are of such a nature that the businesses of the company and the associated companies, taken together, may be reasonably considered to make up a single composite undertaking.

1005Other definitions

In this Part—

  • “convertible securities” has the same meaning as in Chapter 3 of Part 7 of ITEPA 2003 (see section 436 of that Act),

  • “convertible shares” means shares that are—

    1. a

      convertible securities, or

    2. b

      an interest in convertible securities,

  • “the employee” has the meaning given by section 1007(1)(a) or 1015(1)(a) (as the case may be),

  • “the employing company” has the meaning given by section 1007(1) or 1015(1) (as the case may be),

  • “listed company” means a company—

    1. a

      whose shares are listed on a recognised stock exchange, and

    2. b

      which is neither a close company nor a company that would be a close company if it were UK resident,

  • “market value” has the same meaning as in TCGA 1992 (see sections 272 and 273 of that Act),

  • “option” includes any right to acquire shares,

  • “ordinary shares” means shares forming part of a company's ordinary share capital,

  • “the qualifying business” has the meaning given by section 1007(1)(b) or 1015(1)(b) (as the case may be),

  • “the recipient” has the meaning given by section 1007(1) or 1015(1) (as the case may be),

  • “the relevant employment” has the meaning given by section 1007(1)(b) or 1015(1)(b) (as the case may be), and

  • “restricted shares” means shares that are—

    1. a

      restricted securities, or

    2. b

      a restricted interest in securities,

    for the purposes of Chapter 2 of Part 7 of ITEPA 2003 (see sections 423 and 424 of that Act).