Corporation Tax Act 2009 section 992

Award of shares to excluded employee

Section 992 claws back a proportion of the corporation tax relief previously given under a Share Incentive Plan where shares are awarded to an employee whose earnings are not subject to UK income tax.

• Where a corporation tax deduction has been claimed for contributions to a Share Incentive Plan trust, part of that relief is withdrawn if some of the shares are awarded to an "excluded employee"
• An excluded employee is one whose earnings from the relevant employment are not subject to UK income tax — specifically, not within the charge under sections 15 or 20(1) of ITEPA 2003 (broadly, employees who are not UK resident or whose duties are performed wholly overseas)
• The amount of relief withdrawn is proportionate: it equals the fraction of the total acquired shares that were awarded to the excluded employee, applied to the original deduction
• The clawback is achieved by treating the paying company as receiving a taxable amount equal to that proportion of the deduction, at the time the shares are awarded to the excluded employee