Q&As

Can the trustee of an EBT grant unapproved share options to an employee of a company without incurring a tax and NICs charge pursuant to ITEPA 2003, Part 7A?

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Published on LexisPSL on 16/11/2016

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • Can the trustee of an EBT grant unapproved share options to an employee of a company without incurring a tax and NICs charge pursuant to ITEPA 2003, Part 7A?

Employee benefit trusts (EBTs) are commonly used to support employees' share schemes and to provide other benefits to employees in the form of pensions and bonuses. Their use was significantly affected by the introduction of the disguised remuneration rules in Part 7A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).

For further details on the structure of the disguised remuneration rules, see Practice Notes: Disguised remuneration—structure of the regime and its implications in practice and Disguised remuneration—the gateway. For further specific details on the relevant steps, see Practice Note: Disguised remuneration—the relevant steps.

There is a risk that the grant of an unapproved share option by a trustee of an EBT will be deemed to be 'ear-marking' pursuant to ITEPA 2003, s 554B and will therefore result in an early tax and possibly National Insurance contributions (NICs) charg

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