Accounting for share schemes

Produced by Tolley in association with

Employment Tax

Guidance

Introduction

The accounting requirements for Share Based Payment (SBP) arrangements are set out in the International Accounting Standards (IFRS 2) and the corresponding UK standard FRS 102, s 26.

Under previous UK Generally Accepted Accounting Practices (GAAP), smaller companies which were applying the Financial Reporting Standard for Smaller Entities (FRSSE) were not required to account for equity-settled share-based payment arrangements. However, the accounting requirements for SBP arrangements now apply to all companies for periods commencing on or after 1 January 2016 except for the very smallest UK companies that choose to apply FRS 105 “The Financial Reporting Standard applicable to the Micro-entities Regime”, January 2022. The underlying principles in respect of SBP accounting under FRS 102 are similar but not identical to those under FRS 20 (the previous UK standard for SBP arrangements).

The principal feature of share-based payment arrangements is that shares are provided in return for other assets, goods or services. Such arrangements have accounting implications even where no cash changes hands, for example where employees receive shares in return for services provided

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

Stephen Diosi

Head of Employee Incentives, Mishcon de Reya LLP , Employment Tax

Stephen leads the Employee Incentives team at Mishcon de Reya. He has significant experience advising on the strategy, design, implementation and compliance of UK and global employee incentive arrangements, including long term incentive plans, all-employee share plans, HM Revenue and Customs tax-advantaged plans, management incentive plans and growth share and joint ownership plans. Stephen also advises on all related corporate, tax and trusts aspects, corporate governance issues, disclosure of directors' remuneration and share dealing regulations.In addition, Stephen works with companies on the impact that corporate actions have on their incentive arrangements and has acted on many public takeovers, mergers and acquisition, public to private transactions, initial public offerings, capital raising activities and private equity deals.Stephen also advises on contractual disputes and tax investigations relevant to incentives arrangements.Stephen works with a wide range of businesses across several industry sectors, including financial services, natural resources, entertainment, aerospace and transport and for companies that are listed on the London Stock Exchange, AIM and overseas exchanges, together with private equity houses, private companies and owner-managed businesses.

Popular Articles

Owner-Managed Businesses

Residential property and capital allowances

Residential property and capital allowancesResidential property ― plant and machinery allowancesOrdinary residential property does not, and never has, qualified for capital allowances. as CAA 2001, s 35 denies plant allowances for expenditure incurred in providing plant or machinery for use in a

14 Jul 2020 17:14 | Produced by Tolley in association with Martin Wilson and Steven Bone Read more

Owner-Managed Businesses

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more

Corporation Tax

Entity classification

Entity classificationImplications of entity classificationIf a subsidiary is established, it is important to determine how it will be treated for UK tax purposes as this will determine the basis on which it is taxed. A subsidiary may either be transparent (like a partnership, where the individual

14 Jul 2020 11:37 | Produced by Tolley Read more

��Ƶ