In many cases, what companies are trying to achieve cannot be fitted into the relatively stringent requirements of approved share schemes. For example, if a company wants to offer large numbers of shares to selected senior executives and does not qualify for EMI this can present an immediate problem. Similarly, if the shares to be used are in an unquoted subsidiary, no approved scheme will work.
Therefore, despite the unattractive tax treatment, the market in unapproved share schemes has been booming in recent years. We advise on the creation of unapproved share incentive arrangements and the taxation implications arising from existing schemes.
This is an area that HMRC has been concentrating on in recent years and companies should take time to ensure that their arrangements are operated correctly and that they are complying with all of the legislation, including the completion of annual return forms.
Even though it is now almost impossible to avoid an income tax charge or NIC if the shares are marketable, for example in a quoted company, there are ways to minimise tax liabilities.
If you are considering implementing a new share scheme to reward employees, or if you already operate one and wish to ensure that tax liabilities are minimised, please contact us.
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