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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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University Spin-outs

Researchers’ shares in a spin-out: treatment from 2 December 2004

The new legislation in Chapter 4A, Part 7 of ITEPA prevents an Income Tax and NICs charge arising on researchers:

  • on an increase in the value of the shares in the spin-out company that is caused by the transfer of designated intellectual property (IP) from the Research Institution and
  • where the researchers acquire shares after any IP transfer, the value of the IP will not be reflected in considering whether they have acquired the shares at undervalue.

The new rules apply from 2 December 2004. If either the acquisition of shares or the IP transfer agreement, or both, were made on or after that date the new relief will apply.