Corporation Tax Act 2009

Calculation of amount of relief

1018 Calculation of relief if shares are neither restricted nor convertible

(1) If the shares acquired are neither restricted shares nor convertible shares, the amount of relief to be given is an amount equal to—

(a) the market value of the shares when they are acquired, less

(b) the total amount or value of any consideration given by any person in relation to the obtaining of the option or to the acquisition of the shares.

This is subject to section 1020.

(2) The consideration mentioned in subsection (1)(b) does not include—

(a) the performance of any duties of, or in connection with, the relevant employment, and

(b) an amount paid or payable by the employee because of—

(i) an agreement within paragraph 3A(2) of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) or of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7), or

(ii) an election under paragraph 3B of either of those Schedules.

(3) A just and reasonable apportionment is to be made of any consideration given partly in relation to the obtaining of the option or the acquisition of the shares and partly in relation to other matters.

1019 Calculation of relief if shares are restricted or convertible

(1) If the shares acquired are restricted shares or convertible shares (or both), the amount of relief to be given is calculated as follows.

This is subject to section 1020.

(2) If the shares are restricted shares, the amount of relief is equal to—

(a) the amount that counts as employment income of the employee under section 476 of ITEPA 2003 in relation to the acquisition of the shares, or

(b) if the option is a qualifying option (within the meaning of the EMI code), the amount that would have so counted apart from the EMI code.

(3) If the shares are convertible shares, the amount of relief is equal to—

(a) the amount that counts as employment income of the employee under section 476 of ITEPA 2003 in relation to the acquisition of the shares, or

(b) if the option is a qualifying option (within the meaning of the EMI code), the amount that would have so counted apart from the EMI code;

and in calculating the employee’s employment income for this purpose the market value of the shares is to be determined as if they were not convertible shares.

(4) For the purposes of subsections (2) and (3)—

(a) no account is to be taken of any relief under section 481 or 482 of ITEPA 2003, and

(b) “the EMI code” has the meaning given by section 527(3) of that Act.

(5) If the shares are both restricted and convertible, the total amount of relief is whichever is the greater of the amounts of relief given by subsections (2) and (3) (or, if the amount is the same in each case, that amount).

(6) If the employee is dead when the shares are acquired, the amount of relief is to be calculated as if the employee were alive.

1020 Reduction in amount of relief

(1) This section applies if the relevant employment is in relation to both the qualifying business and a business (or part of a business) that is not within section 1015(2).

(2) The amount of relief is to be reduced by a just and reasonable amount.