Part 11Relief for particular employee share acquisition schemes
Chapter 1Share incentive plans
Deductions relating to provision of certain types of shares
994Deduction for providing free or matching shares
1
This section applies if, under an approved share incentive plan, shares are awarded to employees as free or matching shares because of their employment with a company (“the employing company”).
2
A deduction is allowed to the employing company for the period of account in which the shares are awarded to the employees.
3
The amount of the deduction is an amount equal to the market value of the shares awarded to the employees.
4
But if the shares are awarded to the employees under a group plan, the amount of the deduction is an amount equal to the relevant proportion of the total market value of the shares included in the award.
5
The relevant proportion is the proportion that the number of shares awarded to the employees bears to the total number of shares included in the award.
6
For the purposes of this section—
a
the market value of shares is their market value when they are acquired by the trustees of the plan trust, and
b
if the trustees acquire shares on different days, assume that shares acquired on an earlier day are awarded before those acquired on a later day.
7
No deduction, other than one under this section, is allowed to the employing company or any associated company in relation to the provision of the shares awarded to the employees.
8
But subsection (7)—
a
does not prevent a deduction being allowed under section 987 in relation to expenses incurred by a company in setting up a share incentive plan, and
b
is subject to section 988.
9
If the shares are awarded to the employees because of their employment with two or more companies, only one of those companies can make a deduction under this section in relation to the award.
10
This section is subject to section 996.