New section 226C of ITEPA: Only one payment deemed to be made under associated agreements
15.New section 226C of ITEPA ensures that the deemed payment set out in new section 226B of ITEPA is only available to the employee shareholder on the first occasion on which they acquire ‘qualifying shares’ under an employee shareholder agreement. New subsection (1) sets out this condition.
16.New subsections (2) and (3) define ‘qualifying shares’ for the purposes of the condition in new subsection (1) and provide that, for the purposes of this condition, any shares acquired under previous employee shareholder agreements with the same employing company, or with associated companies, are taken into account.
17.New subsection (4)(a) defines two companies as associated for the purposes of this condition if either one has control of the other, or both are under the control of the same person or persons. New subsection (4)(b) provides that for the purposes of this condition, where one company controls another when an employee shareholder agreement is made with an individual, that control is treated as continuing if a subsequent employee shareholder agreement is made with the same individual.
18.New subsection (5) excludes from new subsection 4(b) certain cases where a person who was an employee shareholder with a company that has been dissolved becomes an employee shareholder with an associated company. This is subject to two years having passed between the dissolution of the company in question and the subsequent employee shareholder agreement, during which time that individual has not been employed or engaged by any company associated with the dissolved company.
