Commentary

D1.337 Relief for restricted shares

Corporate tax
Corporate tax | Commentary

D1.337 Relief for restricted shares

Corporate tax | Commentary

D1.337 Relief for restricted shares

Restricted shares are those where there is a contract, agreement or arrangement:

  1.  

    •     requiring forfeiture of the shares or rights in the shares if certain circumstances arise (or do not arise)

  2.  

    •     imposing a restriction on the freedom of the holder to dispose of the shares or rights in the shares or to retain them or the proceeds of their sale1

'Original' relief is given on the award of restricted shares. If there is a further chargeable event, 'additional' relief is available as discussed below.

Original relief

Relief is given on the award of restricted shares. Where the restricted shares/options are also convertible shares/options, the relief is the greater of the amounts described below and those described in D1.3382.

A just and reasonable apportionment of the relief is made where the consideration is given partly for other matters or the award or grant was given in part for the purposes of a non-qualifying business3.

Prior to 1 December 2016 any £2,000 payment deemed to have been made by an employee shareholder (on or after 1 September 20134; see E4.591–E4.593) was ignored for the purposes of establishing whether a person is subject to tax under ITEPA 2003, the amount that counts as employment income and the consideration given by a person in relation to the acquisition of the shares5. From 1 December 2016 the deemed £2,000 payment was withdrawn6 in relation to the calculation of earnings for employee shareholders —

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