Commentary on Sections Overview Chapter 1: Share incentive plans Section 995: Deduction for additional expense in providing partnership shares
2558.This section gives a deduction for any contribution the company makes towards the acquisition of partnership shares. It is based on paragraph 3 of Schedule 4AA to ICTA.
2559.A “partnership share” is defined in paragraph 2(1)(a) of Schedule 2 to ITEPA. It means a share acquired by the trustees on behalf of an employee out of sums deducted from the employee’s salary.
2560.This section is concerned with the case to which paragraph 52 of Schedule 2 to ITEPA applies. Partnership shares are acquired by the trustees with funds provided by the employee. The rules of the SIP may require the employee to make payments to the trustees over an accumulation period which cannot last longer than twelve months. Paragraph 52(3) of Schedule 2 to ITEPA provides the number of partnership shares awarded to the employee is calculated at the end of the accumulation period by reference to the lower of:
	the market value of the shares at the beginning of the period; or
	the market value of the shares on the date on which they are to be acquired.
2561.If the market value of the shares at the end of the period is greater than the value at the beginning the company will make up the difference. This section gives the company a deduction for the excess.