SVM110160 - Part 12 Corporation Tax Relief Deductions
Where an employee obtains a share option, or is awarded shares, Corporation Tax legislation generally allows the employing company a Corporation Tax deduction at the point when the employee acquires the shares and where applicable, is chargeable to Income Tax on them.
The Income Tax charge should match the Corporation Tax deduction (ie. the same value should be used for each.)
Part 12 Corporation Tax relief is the difference between the market value of the shares at the date they were acquired and the consideration given in obtaining the option (S1018 CTA 2009 refers.)
General valuation principles should be applied to arrive at the open market value of the shares both at the date of grant and the date of exercise. If any sale or other exit route is in prospect at either valuation date, then this should be reflected in the valuation by applying a suitable level of discount for delay and uncertainty etc.
More detailed guidance can be found at SVM109070.
Additional Guidance:SVM150000