Quirks and pitfalls

09 June 2005 / Philip Reeves

Issue: 4011 / Categories: Comment & Analysis , Companies , Investments

PHILIP REEVES discusses the potential problem areas of the corporation tax relief for employee shares in FA 2003, Sch 23.

A VALUABLE RELIEF for companies which provide shares for employees was introduced by FA 2003, Sch 23 and this article examines the background to that schedule and also explores the conditions that have to be satisfied in order to claim the relief.

PHILIP REEVES discusses the potential problem areas of the corporation tax relief for employee shares in FA 2003 Sch 23.

A VALUABLE RELIEF for companies which provide shares for employees was introduced by FA 2003 Sch 23 and this article examines the background to that schedule and also explores the conditions that have to be satisfied in order to claim the relief.

Background

Prior to the introduction of Sch 23 there was generally no relief available where a company issued shares to its employees as remuneration. This stems from the old case of Lowry v Consolidated African Selection Trust Limited [1940] 23 TC 259 in which the company failed to obtain a deduction for the difference between the market value of shares issued to employees and the issue price. However companies did seek to obtain relief for the provision of employees' shares through 'the...

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