Taxes Consolidation Act 1997 Schedule 12 paragraph 13

Holding and spending requirements

Schedule 12 paragraph 13 sets out the rules governing how sums received by the trustees of an employee share ownership trust must be held, the timeframe within which they must be spent, and the purposes for which they may be used.

• Any sum received by the trustees must be spent within the expenditure period and only for a qualifying purpose; while retained, it must be kept as cash or in an account with a relevant deposit taker.
• The expenditure period is nine months, starting from the day after the end of the accounting period in which the paying company spent the sum (where the sum comes from the founding company or a company it controls), or from the day the sum is received in any other case.
• Qualifying purposes include acquiring shares in the founding company or specified securities, repaying borrowings, paying interest on borrowings, making payments to beneficiaries or their personal representatives, and meeting expenses.
• Where trustees pay sums to different beneficiaries at the same time, the payments must be on similar terms, though variations based on remuneration levels, length of service, or similar factors do not breach this requirement.