CG67828 - Reliefs: employee-ownership trusts: The 鈥榗onsideration requirement鈥�
Throughout this manual, all legislative references are to (鈥淭CGA92鈥�) unless otherwise stated.
S236H(4)(ca) (inserted by by para 5 of Sch 6 Finance Act 2025)
- the consideration for the disposal does not exceed the market value of the ordinary share capital at the time of the disposal, and
- where some or all of the consideration for the disposal is deferred, that the rate of any interest payable in relation to the deferral does not exceed a reasonable commercial rate.
The first requirement is met where the trustees took the steps that a reasonable prudent person would take to verify the consideration for the disposal does not exceed market value. Typically, this could be receiving and considering an independent professional opinion (that the consideration does not exceed market value). This opinion may be obtained by C or another person provided the trustees are entitled to rely on it. 听The trustees may rely on this opinion unless they have reasonable cause to suspect material facts are incorrect or incomplete. An opinion does not need to be updated to the exact time of the disposal if there are no material changes affecting an earlier opinion.
Where interest is payable on any amounts of the consideration that are deferred, whether the rate of interest exceeds a reasonable commercial rate should be assessed at the date the transaction takes place. 鈥楻easonable commercial rate鈥� means a rate that is commensurate with the expected rate that would be applied in respect of deferred consideration in an equivalent transaction with another trustee or trustees of an employee ownership trust, or taking into account commercial rates of interest on loans with an equivalent level of security or guarantees for a similar period.