Why use non tax-advantaged share options?

Produced by Tolley in association with Helen Wood of HLN WD TX
Employment Tax
Guidance

Why use non tax-advantaged share options?

Produced by Tolley in association with Helen Wood of HLN WD TX
Employment Tax
Guidance
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Share options

An employee share option is a right to acquire shares in the company have the employee works for, or sometimes its parent. The option usually has a fixed exercise price and a defined period during which it can be exercised.

The fixed price can be anything from zero to the current market value or more. Typically, in order to encourage the retention of staff, the minimum option period will be three years or more.

The intention is to give employees a chance to become involved and interested financially in the success of the company or group they work for and feel more aligned with the shareholders of the company.

If the value of the shares has not exceeded the exercise price when the option becomes exercisable, the employee could defer taking up the offer and wait in the hope that the value increases to give them a gain, depending upon the time limit for the exercise of the option.

See Example 1.

Tax efficiency

It must be said that non tax-advantaged

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Helen Wood
Helen Wood linkedinicon

Founder, HLN WD TX , Employment Tax


Helen Wood is the founder of HLN WD TX, a share schemes and employee incentives advisory business.She qualified as a CA with ICAS in 2009 and has worked as a specialist reward and incentives advisor for 17 years, spending 13 of those at KPMG followed by 3 ½ years as an Associate Director at RSM. Helen has worked with businesses ranging from start-ups to fully listed companies, spanning owner-managed businesses, private equity portfolio companies, and AIM listed businesses.She advises on a wide range of employee share schemes and employment related securities matters including the design and implementation of effective management and employee incentives; tax valuation of employment related securities, buy and sell side transaction support, HMRC compliance, tax due diligence and employee ownership trust transactions.

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