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An employing company is entitled to corporation tax relief, under a specific set of Rules in the Corporation Tax Act 2009 (CTA 2009), in relation to:

1. •

   the acquisition of Shares (including on exercise of a share option)

2. •

   by an employee (or director) or any other person

3. •

   because of the employee's employment with that company

Relief is given by way of deduction in computing the employing company's Profits for corporation tax purposes.

Shares are often acquired by employees and Directors (typically upon exercise of employee share options) just before a company is sold. As a result, this corporation tax relief commonly arises in the context of corporate sales and acquisitions. The buyer and seller will typically want to agree upfront which of them will be entitled to benefit from any such relief and include specific provisions dealing with this in the sale documentation.

The amount of available relief may well be uncertain at the time of sale (since it depends on the market value of the shares acquired) and