Taxation of Chargeable Gains Act 1992 Schedule 7D paragraph 2

Gains accruing to trustees

Schedule 7D paragraph 2 provides that gains on shares held by trustees of a share incentive plan are exempt from capital gains tax, provided the shares meet certain qualifying conditions and are awarded to employees within specified time limits.

• Gains accruing to trustees on qualifying share incentive plan shares are not chargeable gains, provided the shares are awarded to employees or acquired as dividend shares within the relevant period
• The relevant period is two years from acquisition if the company's shares are readily convertible assets, or five years if they are not — though if shares become readily convertible within that five-year window, the deadline shortens to two years from that date, if earlier
• Where the trustees acquire shares using a contribution for which a corporation tax deduction is claimed, the relevant period is extended to ten years from the date of acquisition
• Shares acquired earlier by the trustees are treated as awarded to employees before shares of the same class acquired later, and any market created solely for the purposes of the plan is ignored when assessing whether shares are readily convertible assets