Personal Tax

Non tax-advantaged share awards

Produced by Tolley
  • 22 Mar 2022 09:41

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Non tax-advantaged share awards
  • Summary
  • Acquisition of the shares
  • Disposal of shares acquired
  • Gift of shares to employees
  • Further reading

Non tax-advantaged share awards

Summary

HMRC tax-advantaged share award plans are limited in size, tightly defined and, broadly, require awards to be offered to all staff. See the Share incentive plans guidance note. Accordingly, any awards outside this type of plan are considered non tax-advantaged (previously known as ‘unapproved’).

Typically, share awards are seen in the reward packages of senior executives and key employees, often as part of a wider long-term incentive plan (LTIP).

Although there may be some similarities between awards of shares and grant of options, the key difference is that with options, the actual ownership of the share is delayed until the option is exercised. In addition to practical considerations (such as the clock for entrepreneurs’ relief usually starting from the date of share acquisition, see the Conditions for business asset disposal relief guidance note), it may be considered to be a better incentive for employees to have ownership from an earlier date.

Acquisition of the shares

The first consideration with any share award is to establish the market value of the shares being acquired, see the Fiscal

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