The following Employment Tax guidance note Produced by Tolley in association with Ken Moody provides comprehensive and up to date tax information covering:
The tax rules around company share option plans (CSOPs) are extremely generous, subject to a limit of £30,000 in relation to the total market value of the option shares (measured at the time of grant). This note considers them on a step-by-step basis.
HMRC guidance generally is at ETASSUM40000 onwards.
There is usually no income tax or NIC charge arising on the granting of an employment-related securities option. The exception is where a CSOP option is granted at a discount.
There is a charge to income tax if the total amount that the employee has to pay for the grant of the option, and to exercise the option to acquire the maximum number of shares allowed under it, is less than the market value of the same number of shares of the same class as at that date when the option is granted.
If the total that the employee has to pay is less than that market value, the difference between the two figures counts as taxable employment income of the employee for the tax year in which the option is granted, but does not give rise to any charge to Class 1 NIC.
In practice, such a tax charge is unlikely to arise as an option granted at a discount is unlikely to be within the requirements of the CSOP legislation and would instead be treated as a non tax-advantaged share option. This is because for CSOP purposes, the option price must not be manifestly less than the market value of shares of the same class at the time the option is granted. See the Why use non tax-advantaged share options? guidance note for details of the tax treatment of such share options.
There can never be an income tax or NIC charge arising when a CSOP option vests, ie becomes available for exercise.
Neither income tax nor NIC arises on exercising a CSOP
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Usually, allowable capital losses can only be set against chargeable gains. If the losses are not fully utilised against gains in the year in which they arise, the excess is carried forward to use against future gains. See the Use of capital losses guidance note for further details.This rule can be
The substantial shareholding exemption (SSE) provides a complete exemption from the liability to corporation tax on the gains generated from qualifying disposals of shares and interests in shares by qualifying companies. Conversely, if losses are generated by the disposal and the SSE conditions are
When does a trust come to an end?A trust may come to an end because it has run its course and comes to a natural end. If a trust has no assets , it ceases to exist. Alternatively, a trust ends because the trustees or beneficiaries decide to wind it up: the trustees distribute the assets by
Close companies ― overviewMeaning of close companyThe tax rules for close companies are intended to address those companies that are closely controlled (ie by the owners and their families) and therefore could be used to manipulate the tax position of its activities and its investors. Therefore,