Corporation Tax Act 2009 section 996

Shares excluded from sections 994 and 995

Section 996 identifies five categories of shares that are excluded from the corporation tax deductions otherwise available under sections 994 and 995 when free, matching or partnership shares are awarded through a Share Incentive Plan.

• No deduction is available for shares awarded to employees whose earnings from the relevant employment are not subject to UK income tax — typically non-UK resident employees.
• Shares that are specifically liable to depreciate substantially in value, for reasons not applying generally to shares of that company, are excluded to protect employees from being awarded shares designed to lose value.
• Shares are excluded where the employing company or an associated company has already claimed a deduction for providing those same shares to the plan trust or any other trust, preventing double relief.
• Shares acquired by the plan trustees using funds for which a deduction has already been claimed under the contribution-to-trust rules (sections 989 or 991), and shares that have been forfeited by a previous participant and then re-awarded, are also excluded.