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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employment income provided through third parties: exclusions: share schemes etc: several exclusions, same trust or same shares

Section 554E ITEPA 2003

Section 554E provides exclusions to assist the four tax-advantaged share and share option schemes. See EIM45315.

Section 554E refers to these four tax-advantaged schemes separately.

But nothing in Section554E requires shares to be put into separate trusts for each of these schemes if they are to come within the exclusions.

So, it is possible to use one trust for more than one tax-advantaged scheme and still come within Section 554E.

And it is possible to use one trust for both tax-advantaged and non-tax-advantaged schemes and still come within Section 554E (as regards the tax-advantaged schemes).

‘Solely for the purpose of …’

At various places in the share-related exclusion provisions (Sections 554E(3) and (6), 554J(3), 554K(2), 554L(3) and 554M(2)) it is a requirement for qualification for exclusion that steps are taken, or, specifically, shares are earmarked, solely for the purpose of a tax-advantaged share scheme or for providing shares etc in respect of a share or share option award.

A pool of shares held to meet requirements from a number of tax-advantaged and nontaxadvantaged plans in which the employee is a participant will not fail the ‘solely’ test in respect of any one of them.