Law & Tax

Non-statutory tax-effective share incentives

There are a number of non-statutory share incentive arrangements which may be highly tax effective depending on the circumstances of a given company. 

Very broadly, such share plans seek to ensure that the gain in value of the company's shares is subject to capital gains tax at a flat rate of 18% or 28% (for higher rate taxpayers) and not income tax in the hands of the employee (with rates at 40% for annual income above relatively modest levels).

Such plans may include, among others, restricted share plans and nil paid shares and certain arrangements under which specific rights attach to shares over time to allow for this favourable tax treatment.  Companies may also be able to use the recently introduced employee shareholder contracts in order to give employees shares in a tax efficient manner. These plans need to be carefully designed and drafted to reflect the individual circumstances of the company.  A "one- size fits all" approach to such arrangements is simply not possible.

We have considerable experience in advising companies large and small in relation to such arrangements, which is partly why we are recognised as leading employee share scheme experts in the UK in the latest independent guides.

If you would like to discuss what share arrangements might best suit your company then please do contact us. We are very happy to talk to potential new clients and examine the possibilities without charging for the privilege.

Law & Tax Services