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Nil paid and partly paid shares

Produced by Tolley in association with
Employment Tax
Guidance

Nil paid and partly paid shares

Produced by Tolley in association with
Employment Tax
Guidance
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This note considers the taxation of partly paid shares and the tax treatment of shares acquired on deferred terms. Although they have a very similar tax treatment they have different legal effects and commercial implications. In essence both types of arrangement involve acquiring shares and paying for them at a later date.

Nil paid or partly paid shares ― these are shares that are issued as new shares by the company to the employee on terms that state the shares must be paid up at a later date. The shares must be paid up if the company makes a call for the outstanding subscription price.

Shares acquired on deferred payment terms ― these are existing shares that are transferred to the employee by a third party but where the purchase price is left outstanding as a debt owing to the vendor. However, the shares have already been paid up and so are not subject to a call from the company.

Commercial considerations

Why consider a nil or partly

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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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