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Avoiding some unexpected traps with employee share plans.
KEY POINTS
- Successive governments’ belief in the benefits of employee ownership has led to a range of tax-advantaged employee share incentives.
- Each plan has its own inherent conditions and quirks particularly for unlisted companies.
- CSOP and EMI have separate rules but there are two important interactions.
- Shares acquired under EMI options are eligible to the entrepreneurs’ relief 10% rate of capital gains tax.
- CSOP qualifying company tests are less stringent than for EMI but tax advantages are restricted.
- Overlooking the small print can result in partial or complete loss of valuable tax reliefs.
When operating share plans particularly for private companies some areas can cause problems. This article will focus on the two tax-advantaged share plans that we most commonly...
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