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Corporation tax deductions for share plans

Lorna Jordan and Alison Hughes (KPMG) consider some of the practical issues that can arise when claiming corporation tax deductions in respect of share incentive arrangements.

Although statutory corporation tax relief for share plans has been available since 2003 (older readers may still think of this as ‘Schedule 23 relief’) companies can still encounter practical issues when applying the provisions. We will consider some areas that can give rise to difficulties as follows:

  • claiming relief for restricted share units (RSUs) on the correct basis;
  • how the rules apply to internationally mobile employees;
  • net settlement; and
  • the extent to which CTA 2009 ss 1038 and 1038A can deny a general principles deduction.

Recap of the legislation

Under CTA 2009 Part 12 a statutory deduction potentially applies to all forms of employee share awards (e.g. share options RSUs long term incentive plans and employee stock purchase plans). This includes shares obtained under HMRC...

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