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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Specific deductions: employee share schemes: costs of providing shares to employees: introduction

Shares may be provided to employees in a number of ways:

  • by a company (usually the employing company or its parent company) issuing new shares direct to the employees;
  • through an employee share ownership trust set up and funded by contributions from the employing company - the shares provided to the employees may be existing shares bought by the trust, or new shares issued to the trust by the company;
  • through an employee share ownership trust set up by the parent company of a group of which the employing company is a member, funded by contributions from the employing company and any other participating group companies (this is commonly known as a ‘group scheme’);
  • through a global ‘group’ share scheme if the employing company is a member of a multinational group of companies - the parent company may charge the employing company (an ‘intra-group recharge’) for allowing its employees to benefit from the scheme;
  • in smaller privately-owned companies by the existing shareholders who control the company giving or selling their shares direct to employees.