Gift of shares to employee

[sgreen1979]

Company is looking to issue new shares to an employee equating to 5% of the company share capital.

Can the market value of the shares be claimed as a deduction for calculating corporation tax?

If this is the case, will the employee pay tax over through self assessment rather than the company deducting through PAYE? Can I assume also that they will not be considered RCAs and no NI will be payable?

The company is a private limited company currently owned by 2 individuals.

Thanks

[pawncob]

Share transactions are not included in the CT regime, they're capital items.

If they qualify as RCAs then they'll be taxed under PAYE.

http://www.hmrc.gov.uk/manuals/eimanual/EIM11875.htm

[pjclar02]

Share transactions are not included in the CT regime, they're capital items.

As long as the necessary qualifying conditions are met, Schedule 23 FA 2003 allows for a corporation tax deduction on an award of shares (presumably these are being issued for less than market value).