188体育

There are two main kinds of 鈥榞roup schemes鈥� set up by the parent company of a group to provide its shares to employees of any company in the group:

• UK parent companies typically set up an employee share ownership trust through which shares in the parent company are provided to employees of group companies, funded by contributions from their employing companies.
• If the employing company is a member of a multinational group of companies the parent company may charge the employing company (an 鈥榠ntra-group recharge鈥�) for allowing its employees to benefit under a global group scheme.

The main issues to consider in relation to intra-group recharges for employee share schemes where the shares concerned are non-qualifying shares are:

• are the employees concerned working wholly and exclusively for the UK company;
• whether the transfer pricing legislation applies to determine the amount of the allowable deduction for UK tax purposes.

See BIM44463 for a tax case on this area.

Timing of the deduction

If a deduction is in principle allowable for an intra-group recharge, the employee benefit trusts anti-avoidance legislation in BIM44500 onwards applies to determine when it is allowable. The legislation鈥檚 鈥榤atching鈥� effect defers the timing of the deduction until, and restricts it to the extent that, the employee receives benefits in the form of money or assets (including the 鈥榥on-qualifying shares鈥�) on which both Income Tax and NICs liability arises.

All 鈥榥on-qualifying shares鈥� are deemed to be readily convertible assets. Liability to Income Tax (collected under PAYE) and NICs arise when an employee acquires them, so they are 鈥榪ualifying benefits鈥� for the purposes of the employee benefit trust legislation.