Why use non tax-advantaged share options?

Produced by Tolley in association with

Employment Tax

Guidance

Share options

An employee share option is a right to acquire shares in the company have the employee works for, or sometimes its parent. The option usually has a fixed exercise price and a defined period during which it can be exercised.

The fixed price can be anything from zero to the current market value or more. Typically, in order to encourage the retention of staff, the minimum option period will be three years or more.

The intention is to give employees a chance to become involved and interested financially in the success of the company or group they work for and feel more aligned with the shareholders of the company.

If the value of the shares has not exceeded the exercise price when the option becomes exercisable, the employee could defer taking up the offer and wait in the hope that the value increases to give them a gain, depending upon the time limit for the exercise of the option.

See Example 1.

Tax efficiency

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Helen Wood

Founder, HLN WD TX , Employment Tax

Helen Wood is the founder of HLN WD TX, a share schemes and employee incentives advisory business.She qualified as a CA with ICAS in 2009 and has worked as a specialist reward and incentives advisor for 17 years, spending 13 of those at KPMG followed by 3 ½ years as an Associate Director at RSM. Helen has worked with businesses ranging from start-ups to fully listed companies, spanning owner-managed businesses, private equity portfolio companies, and AIM listed businesses.She advises on a wide range of employee share schemes and employment related securities matters including the design and implementation of effective management and employee incentives; tax valuation of employment related securities, buy and sell side transaction support, HMRC compliance, tax due diligence and employee ownership trust transactions.

Popular Articles

Trusts and Inheritance Tax

Spouse exemption from inheritance tax

Spouse exemption from inheritance taxArguably, the most important inheritance tax exemption is the spouse exemption from inheritance tax.There is no IHT to pay on gifts from husband to wife and vice versa, or from one civil partner to the other (referred to collectively in this note as ‘spouses’).

14 Jul 2020 13:56 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more

Employment Tax

Payroll record keeping

Payroll record keepingUnder SI 2003/2682, reg 97, “...an employer must keep, for not less than 3 years after the end of the tax year to which they relate, all PAYE records which are not required to be sent to [HMRC]...”. Reasons for keeping the records include:•being able to calculate tax and

14 Jul 2020 12:52 | Produced by Tolley in association with Ian Holloway Read more

Value Added Tax

Holding companies ― VAT status of activities

Holding companies ― VAT status of activitiesThis guidance note examines how to determine the VAT status of a holding company’s activities. In particular, it looks at:•when a holding company is or is not in business•if a holding company is in business, whether its activities are exempt or taxableThe

14 Jul 2020 17:13 | Produced by Tolley Read more

��Ƶ