Corporation Tax Act 2009 section 995

Deduction for additional expense in providing partnership shares

Section 995 allows a corporation tax deduction for the extra cost a company bears when the market value of partnership shares acquired under a share incentive plan exceeds the amounts deducted from employees' salaries to pay for those shares.

• Where partnership shares are awarded under a Schedule 2 share incentive plan and the market value of the shares when acquired by the plan trustees exceeds the partnership share money paid by employees, the employing company may deduct the excess in the period of account in which the shares are awarded.
• No other deduction for providing the shares is available to the employing company or any associated company, although separate deductions for plan set-up costs and running expenses remain available.
• If the employees are employed by more than one company, only one of those companies may claim the deduction for a particular award.
• The deduction is subject to the exclusions set out in section 996, which may prevent it from being available in certain circumstances.