Section 752: Interest under employees’ share schemes
2852.This section contains an exemption from income tax in respect of interest relating to trustees of certain employees’ share schemes. It is based on section 688 of ICTA.
2853.Subsection (1) applies the section where the trustees receive interest from a participant in the employees’ share scheme and the scheme is set up to comply with certain statutory provisions. Section 688 of ICTA refers to the trustees receiving interest from “employees and directors” of the company. This reflects the wording of section 54(1) of the Companies Act 1948 (the relevant company law enactment when what became section 688 first came into force). However, the relevant company law enactment is now section 153(4)(b) of the Companies Act 1985. That provision refers to “the provision by a company, in good faith in the interests of the company, of financial assistance for the purposes of an employees’ share scheme.”
2854.Subsection (1) of the section brings the wording of this exemption into line with the corresponding company law enactment. See Change 126 in Annex 1.
2855.Subsection (2) provides that the trustees will be exempt from tax charged under Chapter 2 of Part 4 of this Act on the interest they receive if the scheme requires the trustees to pay to the company an equivalent amount as interest. Section 688 of ICTA refers to an exemption from tax “under Case III of Schedule D”. But the reference in the section to Chapter 2 of Part 4 of this Act will include foreign source interest. It would be possible for UK resident trustees to receive interest from non-UK resident employees etc. In such circumstances, it would be illogical to treat the foreign source interest as outside the scope of the exemption. See Change 127 in Annex 1.