Accounting for share schemes

Copyright © 2025 LexisNexis
Produced by Tolley in association with Stephen Diosi
Employment Tax
Guidance

Accounting for share schemes

Copyright © 2025 LexisNexis
Produced by Tolley in association with Stephen Diosi
Employment Tax
Guidance
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Introduction

The accounting requirements for Share Based Payment (SBP) arrangements are set out in the International Accounting Standards (IFRS 2) and the corresponding UK standard FRS 102, s 26.

Under previous UK Generally Accepted Accounting Practices (GAAP), smaller companies which were applying the Financial Reporting Standard for Smaller Entities (FRSSE) were not required to account for equity-settled share-based payment arrangements. However, the accounting requirements for SBP arrangements now apply to all companies for periods commencing on or after 1 January 2016 except for the very smallest UK companies that choose to apply FRS 105 “The Financial Reporting Standard applicable to the Micro-entities Regime”, January 2022. The underlying principles in respect of SBP accounting under FRS 102 are similar but not identical to those under FRS 20 (the previous UK standard for SBP arrangements).

The principal feature of share-based payment arrangements is that shares are provided in return for other assets, goods or services. Such arrangements have accounting implications even where no cash changes hands, for example where employees receive shares in return for services provided

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Stephen Diosi
Stephen Diosi

Head of Employee Incentives, Mishcon de Reya LLP , Employment Tax

Stephen leads the Employee Incentives team at Mishcon de Reya. He has significant experience advising on the strategy, design, implementation and compliance of UK and global employee incentive arrangements, including long term incentive plans, all-employee share plans, HM Revenue and Customs tax-advantaged plans, management incentive plans and growth share and joint ownership plans. Stephen also advises on all related corporate, tax and trusts aspects, corporate governance issues, disclosure of directors' remuneration and share dealing regulations.In addition, Stephen works with companies on the impact that corporate actions have on their incentive arrangements and has acted on many public takeovers, mergers and acquisition, public to private transactions, initial public offerings, capital raising activities and private equity deals.Stephen also advises on contractual disputes and tax investigations relevant to incentives arrangements.Stephen works with a wide range of businesses across several industry sectors, including financial services, natural resources, entertainment, aerospace and transport and for companies that are listed on the London Stock Exchange, AIM and overseas exchanges, together with private equity houses, private companies and owner-managed businesses.

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  • 19 Jan 2023 13:11

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