JSOPs—funding the acquisition and terms of the plan

Copyright © 2025 LexisNexis
Produced in partnership with Stephen Woodhouse and William Franklin
Practice notes

JSOPs—funding the acquisition and terms of the plan

Copyright © 2025 LexisNexis

Produced in partnership with Stephen Woodhouse and William Franklin

Practice notes
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Basic structure of a JSOP

The basic structure of joint ownership involves two owners, namely the employee participant who owns the growth interest, and the co-owner, holding the balance of the interest in the shares.

Typically, the co-owner is the trustee of an employee benefit trust (EBT) established by the company, either specifically to facilitate the jointly owned share structure or established as a general employee share ownership trust. In this practice note, it is assumed that the co-owner will be the trustee of an EBT.

For more general information on joint share ownership plans (JSOPs), see Practice Note: Introduction to JSOPs.

Funding the acquisition of the jointly owned shares

The EBT trustee will usually be funded by the company. There are various approaches to funding, each with different consequences and considerations.

Contribution

The first and in some ways simplest approach would be for the company to make a contribution by way of gift to the EBT. This is the simplest in that there is no requirement for loan documentation or

Stephen Woodhouse
Stephen Woodhouse

After studying law at Leicester University and a career in the City of London spanning 30 years Stephen joined Pett Franklin as the third partner in the team on 1st December 2013.

While practising in the City, Stephen trained at Slaughter and May working in their tax department for seven years after qualifying across a range of tax matters but particularly on employee share schemes. From there he joined Norton Rose to assist with building their employee share scheme practice. He joined Touche Ross (later, Deloitte LLP) in 1994 becoming a partner in 1999 until leaving Deloitte to join us on 1st December 2013.

Throughout his career, Stephen has advised on tax with particular emphasis on employee share schemes and related remuneration issues. He has advised on both domestic and international issues and become an acknowledged expert on employee benefit trusts in their many different guises, both as an adjunct to the operation of employee share schemes as through their wider use to deliver cash based benefits to senior employees, a vehicle to facilitate employee ownership and as part of the succession and exit planning for privately owned companies.

In addition, he has advised extensively on pension planning, particularly for plans to top up the benefits allowed under HMRC registered plans. This includes plans designed consistently with the requirements of the relevant legislation to permit the building up of pension benefits for senior executives in excess of the annual allowance for tax protected pension accrual and the lifetime allowance for tax protected benefits under UK registered plans. He believes that this will be an important area for focus in remuneration and benefits design as the lack of any index linking for registered plan limits mean that the real value of those benefits will erode over time.

As a leading adviser, Stephen speaks frequently at conferences and publishes in the tax press, being a regular contributor to Tolley's Tax Planning and a range of articles and other publications. He also co-authored a textbook on The Taxation of Pension Schemes and worked with the Goode Committee on Pension Law Reform.

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William Franklin
William Franklin

William is an experienced share schemes practitioner. He is also a Chartered Accountant who is widely recognised as a leading adviser on the valuation, accounting and financial aspects of all forms of remuneration, incentive and employee share schemes. He is a member of the HMRC Employment-Related Securities & Valuations sub-group, contributes to Tolley's Guidance on Employment Taxes.

William has considerable experience of determining and agreeing with HMRC the market value for tax purposes of shares in unquoted companies. As a physics graduate, he is also able to advise on IFRS2 accounting and some of the more arcane aspects of option pricing mathematics. Together with David Pett, he first developed the joint share ownership plan (JSOP). William previously worked for Pinsent Masons and Ernst & Young. He has been an active supporter of junior local cricket and ChancetoShine.

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Ownership definition
What does Ownership mean?

The term ownership denotes a wide array of rights over property.

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