Section 297A — Income Tax Act 2007: The number of employees requirement

The number of employees requirement 297A 1 If the relevant company is a single company, the full-time equivalent employee number for it must be less than the permitted limit when the relevant holding is issued.

2 If the relevant company is a parent company, the sum of—

a the full-time equivalent employee number for it, and b the full-time equivalent employee numbers for each of its qualifying subsidiaries, must be less than the permitted limit when the relevant holding is issued.

3 The full-time equivalent employee number for a company is calculated as follows— Step 1 Find the number of full-time employees of the company. Step 2 Add, for each employee of the company who is not a full-time employee, such fraction as is just and reasonable. The result is the full-time equivalent employee number. 3A The permitted limit” means—

a if the relevant company is a knowledge-intensive company at the time the relevant holding is issued (see section 331A), 500, and b in any other case, 250. 3B The Treasury may by regulations amend subsection (3A)(a) or (b) by substituting a different number for the number for the time being specified there.

4 In this section references to an employee—

a include a director, but b do not include—

i an employee on maternity , paternity , shared parental , parental bereavement or neonatal care leave, or ii a student on vocational training.