Corporation Tax Act 2009 (c. 4)

Part 12 U.K. Other relief for employee share acquisitions

Chapter 4 U.K. Additional relief in cases involving restricted shares

1025 Additional relief available if shares acquired are restricted shares U.K.

(1) This Chapter applies if—

(a) relief (“the original relief”) is available under Chapter 2 or 3 in relation to an acquisition of restricted shares, and

(b) after the acquisition—

(i) an event that is a chargeable event in relation to the restricted shares for the purposes of section 426 of ITEPA 2003 occurs, or

(ii) Chapter 2 of Part 7 of ITEPA 2003 ceases to apply to the restricted shares because the employee dies (see section 421B(4) and (6) of that Act).

For the purposes of paragraph (a) it does not matter if the amount of relief is calculated as nil.

(2) Relief under this Chapter is available to the employing company.

(3) Subsection (4) applies if section 426 of ITEPA 2003—

(a) does not apply in relation to the restricted shares, but

(b) would apply if at all material times the employee had been a UK employee.

(4) This Chapter applies as if the employee had been a UK employee as mentioned in subsection (3)(b).

(5) The employee is a UK employee if—

(a) the employee is UK resident F1 ..., and

(b) the duties of the relevant employment are performed in the United Kingdom.

(6) If—

(a) the original relief is available as a result of section 1015(3) (death of recipient), and

(b) the recipient is not the employee,

this Chapter applies as if the recipient were alive and the restricted shares were acquired by the recipient.

(7) If the original relief is available as a result of section 1022 (takeover of company whose shares are subject to an option), this Chapter applies as if the restricted shares were acquired pursuant to the qualifying option mentioned in that section.

(8) To find out what accounting period the relief is given for and how to calculate the amount of relief, see—

(a) section 1026 for relief available as a result of the occurrence of a chargeable event, and

(b) section 1027 for relief available as a result of the employee's death.

Those sections are supplemented by section 1028.

(9) Section 1029 provides for the relief to be given to a successor company if the qualifying business is transferred by group transfers.

Textual Amendments

F1 Words in s. 1025(5)(a) omitted (with application in accordance with Sch. 46 para. 143(2) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 143(1)

1026 Relief available on occurrence of chargeable event U.K.

(1) This section applies in relation to relief available as a result of the occurrence of a chargeable event.

(2) The relief is given for the accounting period in which the chargeable event occurs.

(3) The amount of relief is equal to the amount that counts as employment income of the employee under section 426 of ITEPA 2003 in relation to the chargeable event.

(4) For the purposes of subsection (3) the following are to be ignored—

(a) any relief under section 428A of ITEPA 2003,

(b) section 446E(6) of ITEPA 2003, and

(c) the amount of any non-commercial increase (as defined in section 446K(4) of ITEPA 2003) in the market value of the restricted shares after their acquisition.

[F2 (5) Where the shares are employee shareholder shares, this section is subject to section 1038B.]

Textual Amendments

F2 S. 1026(5) inserted (1.9.2013) by Finance Act 2013 (c. 29), Sch. 23 paras. 29, 38; S.I. 2013/1755, art. 2

1027 Relief available on death of employee U.K.

(1) This section applies in relation to relief available as a result of the employee's death.

(2) The relief is given for the accounting period in which the employee dies.

(3) The amount of relief is equal to the amount that would have counted as employment income of the employee under section 426 of ITEPA 2003 had a chargeable event within section 427(3)(c) of that Act occurred immediately before Chapter 2 of Part 7 of that Act ceased to apply to the restricted shares because of the employee's death.

(4) For the purposes of subsection (3)—

(a) the amount of expenses resulting from section 428(6) of ITEPA 2003 is to be treated as nil, and

(b) the following are to be ignored—

(i) sections 428(9) and 446E(6) of ITEPA 2003, and

(ii) the amount of any non-commercial increase (as defined in section 446K(4) of ITEPA 2003) in the market value of the restricted shares after their acquisition.

[F3 (5) Where the shares are employee shareholder shares, this section is subject to section 1038B.]

Textual Amendments

F3 S. 1027(5) inserted (1.9.2013) by Finance Act 2013 (c. 29), Sch. 23 paras. 30, 38; S.I. 2013/1755, art. 2

1028 Supplementary provision for purposes of sections 1026 and 1027 U.K.

(1) If section 1012 or 1020 (reduction in amount of relief) applies in relation to the original relief, that section applies in relation to the relief under this Chapter as it applies in relation to the original relief.

(2) For the purposes of the giving of the relief under this Chapter—

(a) if the original relief is available under Chapter 2, apply section 1013(2) to (5), and

(b) if the original relief is available under Chapter 3, apply section 1021(2) to (5).

1029 Transfer of qualifying business by group transfers U.K.

(1) This section applies in relation to relief to be given under this Chapter if—

(a) during the interim period (see subsections (5) to (7)), the whole, or substantially the whole, of the qualifying business is transferred, and

(b) conditions A and B are met.

(2) Condition A is that—

(a) the transfer is a group transfer, or

(b) if there is more than one transfer, all the transfers are group transfers.

(3) Condition B is that, as a result of the transfer or transfers, at the end of the interim period—

(a) the whole, or substantially the whole, of the qualifying business is carried on by one company (“the successor company”) only and that company is not the employing company, or

(b) the whole, or substantially the whole, of the qualifying business is carried on by companies (“the successor companies”) none of which is the employing company.

(4) The relief is to be given to—

(a) the successor company, or

(b) whichever one of the successor companies is nominated by them,

instead of the employing company (and references to the employing company in section 1013(3) and (4) or 1021(3) and (4) (as applied by section 1028(2)) are to be read as references to the company to which the relief is to be given).

(5) “The interim period” is to be read in accordance with subsections (6) and (7).

(6) The interim period begins—

(a) if the original relief is available under Chapter 2, when the restricted shares are acquired, and

(b) if the original relief is available under Chapter 3, when the option is obtained.

(7) The interim period ends—

(a) if the relief under this Chapter is available as a result of the occurrence of a chargeable event, when the chargeable event occurs, and

(b) if the relief under this Chapter is available as a result of the employee's death, when the employee dies.