Corporation Tax Act 2009

994 Deduction 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.