Finance Act 2014

43 In Chapter 3 (corporation tax relief if employee or other person obtains option to acquire shares), after section 1015 insert—

“1015A Application of Chapter: employees of overseas companies who take up employment with a UK company

(1) This section applies if—

(a) a person (“E”) has, or had, an employment with a non-UK resident company not within the charge to corporation tax (“the overseas employment”),

(b) E or another person obtains an option to acquire shares because of the overseas employment,

(c) E has an employment (“the UK employment”) with a company that is a UK resident company or a non-UK resident company within the charge to corporation tax,

(d) the person who obtained the option acquires shares pursuant to it, and

(e) subsection (2) applies.

(2) This subsection applies if—

(a) an amount of employment income of E is charged to tax under ITEPA 2003 in relation to the acquisition because of the UK employment, or

(b) it is because of the UK employment that E or another person is able to acquire the shares pursuant to the option.

(3) For the purposes of section 1015(1)(c) (requirement that option is obtained because of employment), the option is (regardless of when it is obtained) to be treated as if it is obtained because of the UK employment.

(4) In section 1016 (conditions relating to the shares acquired) references to the employing company are to be read as including references to the company mentioned in subsection (1)(a).

(5) If, in relation to the acquisition, an amount of relief would otherwise be available that is more than the total amount of employment income of E charged to tax under ITEPA 2003, the amount of relief is (notwithstanding any other provision of this Chapter) limited to the total amount of that income so charged.

(6) If relief is available to more than one company in respect of the same acquisition of shares pursuant to an option, relief may only be given to one of them in respect of that acquisition.

1015B Application of Chapter in relation to employees of overseas companies who work for companies in the UK

(1) This section applies if—

(a) a person has an employment (“the actual employment”) with a non-UK resident company not within the charge to corporation tax (“the overseas employer”),

(b) in performing any of the duties of the actual employment, the person works in the United Kingdom for, but is not employed by, another company (“the host employer”), and

(c) the host employer is—

(i) a UK resident company, or

(ii) a non-UK resident company within the charge to corporation tax.

(2) For the purposes of this Chapter, the person is to be treated as having an employment (“the deemed employment”) with the host employer, the duties of which consist of the work the person does for the host employer.

(3) Subsection (4) applies if—

(a) an option to acquire shares (“the relevant option”) is obtained because of the actual employment,

(b) shares are acquired pursuant to the relevant option, and

(c) because of the work the person does for the host employer, an amount of employment income of the person is charged to tax under ITEPA 2003 in relation to the acquisition of the shares.

(4) For the purposes of section 1015(1)(c) (requirement that option is obtained because of employment), the relevant option is (regardless of when it is obtained) to be treated, so far as would not otherwise be the case, as if it is obtained because of the deemed employment.

(5) In section 1016 (conditions relating to the shares acquired) references to the employing company are to be read as including references to the overseas employer.

(6) If, in relation to an acquisition of shares pursuant to an option, the amount of relief would otherwise be more than the total amount of employment income of the person charged to tax under ITEPA 2003, the amount of relief is (notwithstanding any other provision of this Chapter) limited to the total amount of that income so charged.

(7) If relief is available to more than one company in respect of the same acquisition of shares pursuant to an option, relief may only be given to one of them in respect of that acquisition.

(8) For the purposes of this section a person works for another person if the person provides, and is obliged to provide, personal service to the other person.”