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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

HM Revenue & Customs
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Schedule 3 SAYE option schemes: Shares to which schemes can apply: Company status

Paragraph 19 is concerned with the “status” of the company whose shares are to be scheme shares. Its purpose is to ensure that the shares used in a Schedule 3 SAYE option scheme are shares whose values cannot easily be manipulated.

The scheme shares may be in a company that is not a subsidiary (paragraph 19(b)).

The only subsidiaries whose shares can be used in tax advantaged schemes (as subsidiary companies provide greatest scope for manipulating share values) are those:

  • which are themselves listed on a recognised stock exchange (paragraph 19(a) - see ETASSUM33150), 
  • shares in a company, which are subject to an employee-ownership trust (paragraph 19(1)(ba)), or
  • whose “parent” company is listed and not close, or would not be close if resident in the UK (paragraph 19(c) - see ETASSUM33160).

A subsidiary company which cannot use its own shares as scheme shares in a tax advantaged share scheme may still be able to use the shares of its parent company, whether or not the parent is listed.