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Sharing success

16 November 2010 / Liz Mccarthy
Issue: 4281 / Categories: Comment & Analysis , Employees , Income Tax
LIZ MCCARTHY looks at the tax charges that can arise on employee share schemes, and how they can be mitigated


  • Share schemes form part of a remuneration strategy.
  • Conditions required for HMRC approval.
  • Tax consequences of restricting securities.
  • Benefits and risks of making elections under ITEPA 2003.
  • Effect on cashflow of tax and National Insurance charges.

A common way for employers to incentivise key employees and ensure that their aims are aligned to those of the business is to offer them an opportunity to participate in the equity of the company.

This frequently has the added advantage for the employer of increasing an employee’s overall remuneration package at minimal cash cost.

Corporate tax deductions are usually available for the costs to the employer of providing shares to employees. For unapproved share schemes these are conditional on the share award being taxable in the hands of...

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