BIM44455 - Specific deductions: employee share schemes: providing shares to employees: non-qualifying shares: through an employee benefit trust
Deductions for contributions to employee share ownership trusts or general employee benefit trusts used to provide employees with 鈥榥on-qualifying shares鈥� depend on general tax case law principles. Further guidance is as follows:
| BIM44457 | Whether contributions deductible |
|---|---|
| BIM44458 | Tax cases |
Timing of the deduction
If a deduction is in principle allowable for such contributions, the employee benefit trusts anti-avoidance legislation in BIM44500 onwards applies to determine when it is allowable. The legislation鈥檚 鈥榤atching鈥� effect defers the timing of the deduction until, and restricts it to the extent that, the employee receives benefits in the form of money or assets (including the 鈥榥on-qualifying shares鈥�) on which both Income Tax and NICs liability arises.
All 鈥榥on-qualifying shares鈥� are deemed to be readily convertible assets. Liability to Income Tax (collected under PAYE) and NICs arises when an employee acquires the shares, so they are 鈥榪ualifying benefits鈥� for the purposes of the employee benefit trust legislation.
QUESTs and non-qualifying shares
It is reasonable to assume that shares acquired by employees from a qualifying employee share ownership trust (QUEST - see BIM44010) are 鈥榪ualifying shares鈥�.