Finance Act 2003

Part 1General provisions

Introduction

1(1)This Schedule provides for corporation tax relief for a company where a person—

(a)acquires shares by reason of his, or another person's, employment with that company (an “award of shares”: see Part 2 of this Schedule), or

(b)obtains by reason of his, or another person's, employment with that company an option to acquire shares and acquires shares in exercise of that option (the “grant of an option”: see Part 3 of this Schedule).

(2)Part 4 of this Schedule makes further provision for cases where the shares acquired are subject to forfeiture.

(3)In this Schedule—

• “the employing company” means the company mentioned in sub-paragraph (1);

• “the recipient” means the person acquiring the shares or obtaining the option; and

• “the employee” means the person by reason of whose employment the shares are acquired or the option is granted.

Requirements for relief

2Relief under this Schedule is available only if the requirements of this Schedule are met as to—

(a)the business for the purposes of which the award or grant is made (paragraph 3);

(b)the kind of shares acquired (paragraph 4);

(c)the company whose shares are acquired (paragraph 6 or 12); and

(d)the income tax position of the employee (paragraph 7, 14 or 20).

Business must be within the charge to corporation tax

3(1)The business for the purposes of which the award or grant is made must—

(a)be carried on by the employing company, and

(b)be within the charge to corporation tax.

(2)A business is within the charge to corporation tax if, or to the extent that, it is carried on by a company that is within the charge to corporation tax in respect of the profits of the business.

Kind of shares acquired

4(1)The shares acquired must meet the following requirements.

(2)They must be ordinary shares that are fully paid-up and not redeemable.

(3)They must be—

(a)shares of a class listed on a recognised stock exchange, or

(b)shares in a company that is not under the control of another company, or

(c)shares in a company that is under the control of a company (other than a close company or a company that if resident in the United Kingdom would be a close company) whose shares are listed on a recognised stock exchange.