Corporation Tax Act 2009

Requirements to be met for relief to be available U.K.

1007 Basic requirements for relief under Chapter 2 U.K.

(1) Relief under this Chapter is available to a company (“the employing company”) if—

(a) a person (“the employee”) has employment with the employing company,

(b) that employment (“the relevant employment”) is in relation to a business within subsection (2) (“the qualifying business”),

(c) the employee or another person acquires shares because of the relevant employment,

(d) the conditions set out in sections 1008 and 1009 are met as mentioned in those sections, and

(e) relief under Chapter 3 is not available to the employing company in relation to the acquisition of the shares.

The person who acquires the shares is, in that capacity, called “the recipient”.

(2) A business is within this subsection so far as—

(a) the business is carried on by the employing company, and

(b) the employing company is within the charge to corporation tax in relation to the profits of the business [F1 or would be but for section 18A].

Textual Amendments

F1 Words in s. 1007(2)(b) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 9, 31

[F2 1007A Application of Chapter in relation to employees of overseas companies who work for companies in the UK U.K.

(1) This section applies if—

(a) a person has an employment (“the actual employment”) with a non-UK resident company not within the charge to corporation tax (“the overseas employer”),

(b) in performing any of the duties of the actual employment, the person works in the United Kingdom for, but is not employed by, another company (“the host employer”), and

(c) the host employer is—

(i) a UK resident company, or

(ii) a non-UK resident company within the charge to corporation tax.

(2) For the purposes of this Chapter, the person is to be treated as having an employment with the host employer (“the deemed employment”), the duties of which consist of the work the person does for the host employer.

(3) Subsection (4) applies if—

(a) shares (“relevant shares”) are acquired because of the actual employment, and

(b) because of the work the person does for the host employer, an amount of employment income of the person is charged to tax under ITEPA 2003 in relation to the acquisition of the relevant shares.

(4) For the purposes of section 1007(1)(c) (requirement that shares are acquired because of employment) the relevant shares are (regardless of when the acquisition takes place) to be treated, so far as would not otherwise be the case, as if they are acquired because of the deemed employment.

(5) In section 1008 (conditions relating to the shares acquired) references to the employing company are to be read as including references to the overseas employer.

(6) If, in relation to an acquisition of shares, the amount of relief would otherwise be more than the total amount of employment income of the person charged to tax under ITEPA 2003, the amount of relief is (notwithstanding any other provision of this Chapter) limited to the total amount of that income so charged.

(7) If relief is available to more than one company in respect of the same acquisition of shares, relief may only be given to one of them in respect of that acquisition.

(8) For the purposes of this section a person works for another person if the person provides, and is obliged to provide, personal service to the other person.]

Textual Amendments

F2 S. 1007A inserted (6.4.2015) by Finance Act 2014 (c. 26), Sch. 9 paras. 42, 47

1008 Conditions relating to shares acquired U.K.

(1) Each of the following conditions must be met in relation to the shares acquired.

Condition 1

The shares are ordinary shares that are fully paid-up and not redeemable.

Condition 2

The shares are—

(a) shares of a class listed on a recognised stock exchange,

(b) shares in a company that is not under the control of another company, or

(c) shares in a company that is under the control of a listed company.

Condition 3

The shares are shares in—

(a) the employing company,

(b) a company that, when the shares are acquired, is a parent company of the employing company,

(c) a company that, when the shares are acquired, is a member of a consortium that owns the employing company,

(d) a company that, when the shares are acquired, is a member of a consortium that owns a parent company of the employing company, or

(e) a company within subsection (2).

(2) A company (“company A”) is within this subsection if when the shares are acquired—

(a) the employing company or a parent company of the employing company is a member of a consortium that owns another company (“company B”), and

(b) company A is—

(i) a member of that consortium or a parent company of a member of that consortium, and

(ii) a member of the same commercial association of companies as company B.

1009 Conditions relating to employee's income tax position U.K.

(1) If the shares acquired are not restricted shares, the following conditions must be met in relation to the income tax position of the employee.

Condition 1

The employee is subject to a charge under ITEPA 2003 in relation to the acquisition of the shares.

Condition 2

Section 446UA of ITEPA 2003 does not apply in relation to the shares.

(2) If the shares acquired are restricted shares, the following condition must be met in relation to the income tax position of the employee.

The Condition

The employee—

(a) has, as a result of the acquisition of the shares, [F3 relevant earnings] from the relevant employment that are subject to the charge under Part 2 of that Act, or

(b) is not within paragraph (a) but will be subject to a charge under ITEPA 2003 as a result of section 426 of that Act if an event occurs in relation to the shares that is a chargeable event for the purposes of that section.

[F4 (2A) Relevant earnings” means—

(a) earnings within Chapter 1 of Part 3 of ITEPA 2003, and

(b) any amount that is treated as earnings by virtue of section 226A of that Act (employee shareholder shares).]

(3) Subsection (4) applies if—

(a) the conditions are, or the condition is, not met, but

(b) the conditions or the condition would be met 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 F5 ..., and

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

F6 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F3 Words in s. 1009(2)(a) substituted (1.9.2013) by Finance Act 2013 (c. 29), Sch. 23 paras. 23(2), 38; S.I. 2013/1755, art. 2

F4 S. 1009(2A) inserted (1.9.2013) by Finance Act 2013 (c. 29), Sch. 23 paras. 23(3), 38; S.I. 2013/1755, art. 2

F5 Words in s. 1009(5)(a) omitted (with application in accordance with Sch. 46 para. 141(2) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 141(1)

F6 S. 1009(6) omitted (with effect in accordance with s. 12(5)-(7) of the amending Act) by virtue of Finance Act 2017 (c. 10), s. 12(4)(b)