Income Tax (Earnings and Pensions) Act 2003 section 68

Meaning of "material interest" in a company

Section 68 defines what it means for a person to have a "material interest" in a company for the purposes of the employment benefits code.

• A person has a material interest if they, alone or together with associates, beneficially own or control more than 5% of the company's ordinary share capital, whether directly or indirectly
• For close companies, a material interest also arises where a person, alone or with associates, holds or is entitled to acquire rights that would give them more than 5% of the assets available for distribution on a winding-up or in other circumstances
• Associates include a broad range of family members: spouses, civil partners, parents, children, remoter direct-line relations, siblings, and the spouses or civil partners of any of those relatives
• The definition of associate follows the Corporation Tax Act 2010, and participators are those persons who have a share or interest in the income or capital of a close company