BIM44450 - Specific deductions: employee share schemes: providing shares to employees: non-qualifying shares: introduction: contents

The statutory deduction for provision of shares to employees in BIM44260 onwards is not available where shares are provided to employees which are not 鈥榪ualifying shares鈥�.

Deductions for the costs to employers of providing non-qualifying shares are determined by general tax principles, subject to the anti-avoidance provisions for employee benefit trusts in BIM44500 onwards.

The costs of providing 鈥榥on-qualifying shares鈥� to employees fall into the following categories:

  • shares provided through 鈥榗ase law鈥� employee benefit trusts to which the employer makes contributions, see BIM44455,
  • shares provided to employees under global share schemes for which the employer pays an intra-group recharge, see BIM44460,
  • new 鈥榥on-qualifying shares鈥� issued direct to employees, see BIM44465.

Non-qualifying shares

The following shares are not qualifying shares for these purposes:

  • partly-paid shares, or
  • redeemable shares, or
  • preference shares, or
  • unlisted shares in a subsidiary company (unless its parent company is listed on a recognised stock exchange and is not a close company), or
  • shares in a company which is not sufficiently linked to the employing company (see BIM44295) at the date on which the employee acquires:
    • the shares, or
    • any earlier right (share option) to acquire the shares.

The following pages give further guidance on deductions for providing non-qualifying shares to employees.