What type of share scheme is best for a director or employee? Is it a good idea to set up different share classes? What about share option schemes?
For a rundown of the basic rules on taxing awards of shares and securities see:
- Employment-related securities (share scheme basics)
- A company may issue shares or share options to a director or an employee.
- A share award is ‘employment related’ if made to a prospective, current or past director or employee.
- You generally cannot give an employee or directors shares without tax consequences.
- The general rule is that unless the employee pays the full market value for their shares there will potentially an Income Tax charge on the acquisition of their shares.
- A company may issue shares or share options to a director or an employee.
If you are considering share options see
- EMI: Enterprise Management Incentives: at a glance
The Enterprise Management Incentive (EMI) is a tax-advantaged employee share option scheme designed for small and medium-sized companies.
If you are dealing with family companies and shares are being issued to family members, see:
- ABC different share classes: Family companies
for a checklist and discussion on anti-avoidance issues when you create different share classes and special rights for family company shares.
For share awards outside family companies, see:
