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Hitting the target with Schedule 23

14 March 2007
Issue: 4099 / Categories: Comment & Analysis , Companies , Income Tax
Some practical issues concerning corporation tax relief and employee share plans are discussed by MICHAEL CARTER and SCOTT McCRORIE.

KEY POINTSSch 23 provides corporation tax relief increasing the value of the company on sale.Conditions for claiming Sch 23 relief.Timing the exercise of options.Importance of maintaining records.Early planning may help increase relief claim.

A STATUTORY BASIS for claiming corporation tax relief in respect of the 'cost' of providing employees with shares in their employing group outside an approved share incentive plan was introduced by FA 2003 Sch 23. HMRC recently released draft clauses re-writing this legislation as part of the new corporation tax re-write bill. However the substance of this legislation is likely to remain the same. The Schedule also supersedes the previous regime for contributions to qualifying employee share ownership trusts. For many companies Sch 23 provides valuable corporation tax relief that increases the value of the company on a sale. It is therefore vital to try to ensure that deals...

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