Comparison of UK and US share incentive arrangements
Produced in partnership with Jonathan Fletcher Rogers of Addleshaw Goddard
Comparison of UK and US share incentive arrangements

The following Share Incentives guidance note Produced in partnership with Jonathan Fletcher Rogers of Addleshaw Goddard provides comprehensive and up to date legal information covering:

  • Comparison of UK and US share incentive arrangements
  • Tax advantaged share plans—UK and US comparison
  • Operating a US ESPP in the UK
  • Replicating an ESPP through an SAYE or SIP
  • US company granting options in the UK—UK and US comparison
  • Non tax-advantaged share plans

Companies in both the US and the UK have a long history of involving employees in equity ownership, and both countries have provided tax breaks and implemented other measures to promote employee share ownership. Although the type of plans operated in the US and UK have developed differently over the years, there are many common features. This Practice Note sets out to compare the UK and US:

  1. tax-advantaged all employee plans

  2. discretionary share plans, and

  3. non tax-advantaged share plans

The tables below contain only summarised information so should be read in conjunction with the suggested further Practice Notes.

Tax advantaged share plans—UK and US comparison

All employee plans

The following table sets out a comparison between the tax qualified employee stock purchase plan (ESPP) in the United States (US), and two of the tax-advantaged plans available in the UK—the save as you earn or savings related share option plan (SAYE) and the share incentive plan (SIP). The ESPP, SAYE and SIP are all plans that must be operated on an all-employee basis. For further details on ESPPs, SAYE schemes and SIPs more generally, see Practice Notes: Qualified US Employee Stock Purchase Plans—design and compliance, How SAYE schemes work and key features and What is a SIP?

  US—Section