Corporation Tax Act 2009

996 Shares excluded from sections 994 and 995

(1) No deduction is allowed under section 994 or 995 in relation to shares to which any of exclusions 1 to 5 applies.

(2) Exclusion 1 applies to shares awarded to an excluded employee.

(3) For the purposes of subsection (2) an employee is excluded if, at the time the shares are awarded to the employee, the earnings from the employee’s employment with the employing company are not (or would not be if there were any) chargeable earnings—

(a) to which section 15 of ITEPA 2003 applies, or

(b) to which a section listed in section 20(1) of ITEPA 2003 applies.

(4) Exclusion 2 applies to shares in a company that are liable to depreciate substantially in value for reasons that do not apply generally to shares in that company.

(5) Exclusion 3 applies to shares in relation to which a deduction has been made by the employing company or an associated company in relation to the provision of the shares for the plan trust or for another trust.

(6) For the purposes of subsection (5)—

(a) it does not matter upon what basis that deduction was made or what the nature or purpose of the other trust is, and

(b) if the trustees of the plan trust acquire shares on different days, in determining whether the same shares have been provided to more than one trust, assume that shares acquired on an earlier day are awarded under the plan trust before those acquired on a later day.

(7) Exclusion 4 applies to shares acquired by the trustees of the plan trust as a result of a payment in relation to which a deduction is made under section 989 or 991.

(8) Exclusion 5 applies to shares awarded after having been forfeited by a participant.