The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004

Costs of establishing employee share ownership trusts

6.—(1) Section 85A(1) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (a), omit “or”; and

(b) for paragraph (b) (expenditure to be treated as expenses of management) substitute—

“(b) if the company is a company with investment business, shall be treated as expenses of management deductible under section 75 to the extent that it otherwise would not be, or

(c) if the company is one in relation to which section 76 applies, shall be treated for the purposes of that section as expenses payable which fall to be brought into account at Step 1 in subsection (7) of that section to the extent that it otherwise would not be.”.

(3) In subsection (3) (timing rule where trust established more than 9 months after end of period of account in which expenditure incurred) for the words following paragraph (b) substitute—

• “for the purpose of applying subsection (2) above, the expenditure shall be treated in accordance with subsection(3A) below.”.

(4) After subsection (3) insert—

“(3A) Where this subsection applies—

(a) in applying subsection (2)(a) above, the expenditure shall be treated as incurred in the period of account in which the trust is established (and not the period of account mentioned in subsection (3)(b) above),

(b) in applying subsection (2)(b) or (c) above, the expenditure shall be treated as referable to the accounting period in which the trust is established.”.

(1)

Section 85A was inserted by section 43 of the Finance Act 1991 and amended by paragraph 1 of Schedule 7 to the Finance Act 1998.