Q&As

Are there any disguised remuneration consequences of leaving shares to an employee under a Will?

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Produced in partnership with Christopher Snell of New Square Chambers
Published on LexisPSL on 15/10/2018

The following Share Incentives Q&A Produced in partnership with Christopher Snell of New Square Chambers provides comprehensive and up to date legal information covering:

  • Are there any disguised remuneration consequences of leaving shares to an employee under a Will?
  • What is the disguised remuneration regime?
  • What is the potential disguised remuneration risk of leaving shares to an employee in a Will?
  • Relevant steps
  • Connection to employment—relevant arrangement

This Q&A considers whether the provisions set out in Part 7A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) apply in a situation where a shareholder has left shares to an employee, former employee or prospective employee in a Will.

Until such time as the effect of ITEPA 2003, Pt 7A is subject to a definitive court ruling, the question of whether leaving shares to an employee in a Will is likely to have disguised remuneration consequences is uncertain. There is no definitive answer to the question and each case will be likely to revolve around the specific factual matrix in which it accrues.

What is the disguised remuneration regime?

The current legislation surrounding disguised remuneration is to be found in the widely drafted provisions found in ITEPA 2003, Pt 7A. Given the breadth of the drafting, it is correct to say that the legislation applies to many types of arrangements concerning employees.

ITEPA 2003, Pt 7A applies when either: (a) there is a relevant arrangement that is concerned (either in whole or in part) with the provision of rewards, recognition or loans in connection with employment; and (b

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