Commentary

B2.424 Employees—share incentives

Business tax
Business tax | Commentary

B2.424 Employees—share incentives

Business tax | Commentary

B2.424 Employees—share incentives

HMRC's internal guidance concerning the deductibility of share scheme costs is contained in BIM44000 onwards. The key issue to determine is whether any of the particular costs are capital in nature and therefore disallowable for the purposes of calculating trade profits.

The special provisions for certain tax-favoured employee share schemes are discussed below.

In P-E Consulting Group Ltd1, payments by a company to a trust set up to acquire shares in the company for the benefit of the employees and to prevent outside interference were held to be deductible on the basis that:

  1.  

    •     the payments to the trust were revenue and not capital expenditure because:

    1.  

      –     the object of the scheme was to enable the taxpayer company's business to be carried on more efficiently, since the conduct of its business depended on the high qualifications and expertise of its staff and their efforts in promoting the taxpayer company's business free from outside

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