Income Tax Act 2007 section 489

"The applicable period" in relation to shares

Section 489 explains how to determine the "applicable period" for shares held by trustees of a Schedule 2 share incentive plan, which governs how long certain tax rules under section 488 apply to those shares.

• If any shares in the company were readily convertible assets when the trustees acquired the relevant shares, the applicable period is two years from the acquisition date.
• If no shares were readily convertible at acquisition, the applicable period is the earlier of five years from acquisition or two years from the date any shares in the company become readily convertible assets.
• Where the shares were acquired as a result of a company contribution for which a corporation tax deduction is allowed under section 989 of CTA 2009, the applicable period is extended to ten years from the acquisition date, overriding the standard rules.
• Any market for shares that exists solely because the trustees acquired shares for the share incentive plan is ignored when deciding whether shares are readily convertible assets.