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Companies can now obtain corporation tax relief when
they provide shares for employee share schemes in
a wider range of circumstances than before.
Companies will benefit from tax relief where employees
are subject to income tax on the award of shares,
and also where shares are provided for any of the
share schemes or enterprise management incentive share
options approved by the Inland Revenue.
Accounting for change
The change, which applies to accounting periods starting
after 31 December 2002, will make it easier for companies
to set up share schemes without having to establish
complex trust arrangements to secure corporation tax
relief.
Tax-free benefits
On the other hand, employers who have established
employee benefit trusts (EBTs) as a means of providing
tax-free benefits to employees might not welcome the
move to defer corporation tax relief on contributions
to EBTs until the EBT makes a payment that is liable
to income tax.
Article date August
2003
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