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Complex share award schemes

Produced by Tolley in association with
Employment Tax
Guidance

Complex share award schemes

Produced by Tolley in association with
Employment Tax
Guidance
imgtext

Companies engage in more complex planning for their share incentive arrangements for a number of reasons. These include funding issues for participants where:

  1. •

    the initial value of an award is relatively high

  2. •

    companies are having to deal with headroom issues (ie they may have reached their limits on shareholder dilution)

  3. •

    companies wish to take advantage of potentially beneficial tax treatment for their employees where such companies do not qualify for statutory tax advantaged plans which satisfy the requirements of ITEPA 2003, Schs 2–5 (the qualifying plans), including Enterprise Management Incentives (EMI) and company share option plan (CSOP)

As such, more complex plans aim to provide a share-based award for employees with a low initial value but with the potential to generate growth in the shares that is subject to capital gains tax rather than income tax.

This note looks at two different structures often used to achieve this aim by summarising the commercial considerations, an outline of the structure and briefly discusses the tax treatment of each:

  1. •

    jointly

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Helen Wood
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.

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