Income Tax (Earnings and Pensions) Act 2003 section 495

No charge on increase in value of shares in dependent subsidiary

Section 495 protects participants in a Share Incentive Plan from being charged income tax on increases in the value of shares in a dependent subsidiary while those shares remain within the plan.

• Where shares are held within a Share Incentive Plan, any increase in value of shares in a dependent subsidiary is not subject to income tax under the dependent subsidiary charge rules.
• The protection applies for as long as the shares are subject to the plan at the time the chargeable increase is calculated.
• The protection also covers the moment immediately before the shares leave the plan, such as when they are sold whilst still in the plan.
• This is one of three related provisions that shield participants from certain tax charges connected with holding shares through a Share Incentive Plan.