Taxes Consolidation Act 1997 Schedule 11 paragraph 8A

Employee share option trust (ESOT) - replacement shares

Schedule 11 paragraph 8A clarifies how the reference to "shares" in paragraph 8(d) is to be read where shares held by an Employee Share Ownership Trust (ESOT) have been replaced following a company reorganisation.

• Any reference to "shares" in paragraph 8(d) includes shares acquired by the ESOT trustees as a result of a company reorganisation or reduction of share capital under section 584.
• This applies where the reorganisation occurred after the original share-for-share exchange referred to in paragraph 8(d).
• The replacement shares must represent either the original shares acquired on the exchange, or specified securities acquired on the exchange as defined in section 509(1).
• The effect is that relief under paragraph 8(d) is not lost simply because the ESOT's original shares or specified securities were replaced through a subsequent reorganisation.