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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Trusts for particular purposes: employment-related trusts - approved profit sharing schemes (APS)

Companies may set up a share scheme via a trust to acquire shares for the benefit of employees. Up until 5 April 2001, the company could apply for approval for the share scheme under Paragraph 1, Schedule 9 ICTA 1988, as an ‘approved profit share scheme’. Such approval entitled the company and the trust to various tax advantages. Relief from income tax, for employees, was withdrawn in relation to appropriation of shares made after 31 December 2002. Companies could claim a corporation tax deduction for contributions made to a profit-sharing scheme trust up to and including 5 April 2002 provided it was used to acquire shares, which were appropriated to employees on or before 1 January 2003 and within 9 months after the end of the accounting period in which the contribution was made.