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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

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HM Revenue & Customs
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Schedule 4 Company Share Option Plan (CSOP): Eligibility of individuals to participate: The "no material interest" requirement: Interests under trust

The words “interested in” have a wide meaning (see CTM60160). For example, where shares are held by trustees, the trustees, the beneficiaries and the remaindermen (if any) of the trust are “interested in” the shares.

A trustee of a settlement will be associated with all others who are “interested in” the shares held by the trust. The trustees may therefore be associated with each other and with the beneficiaries of the trust.

A participant who:

  • owns shares in his own right,  and
  • is also the trustee of a trust which owns shares in the same company may be an associate of himself.

If a participant has two capacities - that of individual shareholder or option-holder and that of trustee - it may be necessary, in computing whether he has a material interest, to aggregate interests held by:

  • the participant in his own right,
  • his relatives, partners, or settlements of which he was the settlor,
  • any trust of which he is a trustee,
  • any trust in which he is otherwise interested, for example as a beneficiary. Interests held as beneficiaries are considered at ETASSUM42400.

The fact that a person’s “interests” in shares arise in different capacities (i.e. personal and trustee), is irrelevant for the purposes of computing his own material interest.

The different capacities in which a person has “interests” in shares may, however, be relevant in computing whether any of his associates has a material interest. For example, in computing the material interest of his associates in a personal capacity (i.e. relatives or partners) only his interests in a personal capacity need be aggregated with their interests in deciding whether they have a material interest. In computing the material interest of his associates in a trustee capacity (i.e. the other trustees or beneficiaries of the trust) only his interests in a trustee capacity need be aggregated with their interests in deciding whether they have a material interest.