Taxes Consolidation Act 1997 Schedule 11 paragraph 4

Eligibility conditions

Paragraph 4 sets out the eligibility conditions that must be met for employees and directors to participate in an approved profit sharing scheme, together with anti-avoidance rules on scheme design and loan arrangements.

• Participation must be open to all employees or directors who satisfy qualifying conditions, including a service period of up to three years and chargeability to tax under Schedule E, and all who qualify must be eligible to participate on similar terms.
• For schemes approved on or after 27 March 1998, the scheme must not contain features that discourage any class of eligible employees from participating, and group schemes must not confer benefits wholly or mainly on directors or the highest-paid employees.
• Special rules apply to schemes established by a relevant company (TSB Bank or ICC Bank), allowing ex-employees and ex-directors to participate and counting service in group companies towards the qualifying period.
• From 4 February 2010, a scheme will not be approved if there are arrangements in place — however informal — for loans or credit to be provided to some or all eligible participants.