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E4.508AA Shares in research institution spin-out companies—overview

HMRC reporting requirements under the current regime, especially via annual returns ¹, has given HMRC a significant awareness of the precise extent to which employees are provided with shares by employers, and have thrown up a number of problem areas. One of these has been in the context of spin-out companies. Special reliefs have therefore been introduced where shares are provided in order for university research institutions and employees to exploit as yet 'undeveloped' intellectual property (IP). In essence the relief seeks to disregard the potential value of that IP when those shares are acquired.

For further details of how the tax reliefs, on shares in research institution spin-out companies, operate see E4.508AB and for definitions see E4.508AC. For historical rules which may apply to shares acquired before 2 December 2004, see E4.508AD.

Many universities own intellectual property created by their employees. The same applies to public-sector research establishments, entities such as NHS Trusts and MOD and some charities. They have 'intellectual property sharing policies' (sometimes also