Jeremy Edwards
Jeremy has 18 years' experience as an employee benefits lawyer and 2 years experience as a corporate lawyer. Jeremy advises on all aspects of employee share plans, executive compensation and the taxation of employees. Jeremy has substantial UK experience, including implementing plans for UK listed companies, advising on UK tax issues and dealing with share plans in the context of corporate transactions. Jeremy also has extensive experience in connection with the implementation of share plans globally and working with multinational clients.
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10 Contributions by Jeremy Edwards
PRACTICE NOTES
Archived: UK prospectus regime for employee share offers before 19 January 2026—exemptions, disclosure and FSMA requirements
ARCHIVED: This Practice Note has been archived and is now unmaintained.
NOTE: With effect from 19 January 2026, the UK Prospectus Regulation was revoked, and a replacement framework for public offers of securities and the admission of securities to trading in the UK entered into force in its place nationwide with effect.
Accordingly, this Practice Note is no longer maintained from 19 January 2026 with effect.
For information on how the successor regime applies to employee share schemes, refer to Practice Note: The public offers of securities and prospectus regimes in the context of employee share plans.
Introduction and legal framework
As in many jurisdictions, the UK controls public offers of securities via a range of investor-protection measures, including requiring securities issuers to meet specified minimum disclosure standards set out in applicable rules therein.
Unless an offer benefits from an exemption or otherwise sits beyond the public offer regime, the offering company must prepare and submit a prospectus to the Financial Conduct Authority (FCA) for approval and publication.
In practice, where offers are made to employees, companies may rely on an employee share exemption from prospectus obligations, provided they supply a straightforward disclosure document to recipients as
Additional exemptions may...
Share Incentives
PRACTICE NOTES
Brexit’s impact on UK employee share schemes: prospectus rules, data protection, social security, EMI, passporting, market abuse and directors’ remuneration reporting
ARCHIVED: This Practice Note is archived and is no longer maintained or updated.
Level of uncertainty
Following the UK's withdrawal from the EU on 31 January 2020, and the eleventh-hour trade agreement with the EU, businesses and plan administrators are evaluating how Brexit will influence different elements of share schemes across their organisations and operations. A positive development is that, with the arrival of the employee share scheme exemption under Regulation (EU) 2017/1129, the Prospectus Regulation, the principal obstacle formerly facing companies offering share incentives has, in practice, fallen away. Nonetheless, several other facets of share plans, and how they are operated, will or could be touched by Brexit. Despite the trade deal, questions persist around financial services, which may affect administrators and other advisers. Some matters demand additional steps, including monitoring internationally mobile staff and making sure social security contributions are settled in the correct jurisdiction appropriately.
Prospectus requirements
A leading impediment for employers trying to extend share plans in a given jurisdiction is where a prospectus is mandated by that country’s securities regime. Producing a prospectus can prove expensive and lengthy, and is typically only practical where the employer has a sufficient number of employees in that country...
Share Incentives
PRACTICE NOTES
Employee offers of listed shares: ESMA light‑touch short‑form prospectus requirements—content, omissions, home Member State, approval, and EU Prospectus Regulation/Brexit context
Background
Pursuant to Article 3(1) of Directive 2004/39/EC, the EU Prospectus Directive (PD), and section 85(1) of the Financial Services and Markets Act 2000 (FSMA 2000), making any direct or indirect public offer of transferable securities (including, for example, listed shares) to any person in the UK is generally prohibited unless a prospectus sanctioned by the FCA, or by another EU state’s competent authority, has first been duly published, or a relevant statutory exemption clearly applies. If it is determined that an offer to employees (or ex‑employees) from time to time necessitates a prospectus, a company may, instead, be able to prepare one by relying on a short form disclosure regime. See Practice Note: When is a prospectus needed for an offer to employees (the pre‑19 January 2026 regime)? [Archived] for a fuller description of when a prospectus must be produced, approved and submitted. Under the short form disclosure regime, the prospectus rules still apply, but are construed and applied so as to facilitate compliance for companies with shares admitted to trading outside the EU. Several US companies with shares quoted on the National Association of Securities and Deals Automated Quotations (NASDAQ) or the New York Stock Exchange (NYSE) have...
Share Incentives
PRACTICE NOTES
UK CGT on LTIP‑derived shares: conditional awards, nil‑cost options, SARs and restricted shares; share identification rules, business asset disposal relief and reporting
What is a long-term incentive plan?
As set out in the Practice Note: What is a long-term incentive plan?, the awards most frequently delivered under a long-term incentive plan (LTIP) typically comprise:
conditional share awards (often referred to in the US as restricted stock units (RSUs))
nil-cost options
share appreciation rights (SARs)
forfeitable shares, sometimes described as restricted stock
A brief summary outline of the likely capital gains tax (CGT) treatment on disposals of shares obtained on the vesting of each LTIP award type is set out below.
For more detail and background on the different award types available under an LTIP, see Practice Note: Structure of a long-term incentive plan—Types of awards for further guidance.
Please note that this Practice Note proceeds on the basis that, at acquisition of the shares or otherwise on vesting of the LTIP awards, the employee has been fully subject to income tax and, where the shares are readily convertible, national insurance contributions (NICs).
It therefore considers the CGT charges on subsequent gains realised after the employee has been taxed on acquiring the shares following the vesting of the LTIP awards...
Share Incentives
PRACTICE NOTES
UK ERS share schemes: HMRC registration, self-certification and annual returns - deadlines, penalties and FAQs for CSOP, SAYE, SIP, EMI and Other arrangements
The regime introduced in 2014
From 6 April 2014, companies have been required to:
register employee share schemes with HMRC online by the relevant deadlines
self-certify tax-advantaged employee share schemes during online registration, reflecting the end of HMRC’s approval regime from 6 April 2014
submit annual HMRC employee share scheme returns online by 6 July each year
Completion of online registration is necessary before filing annual returns and, for tax‑advantaged plans, to maintain the tax benefits. Electronic submissions replaced the previous paper-based returns.
Further information
For details of the legislative provisions on filing and registration for each employee share plan, see Practice Notes:
EMI—HMRC annual return
CSOP—self certification, registration and filing requirements
Self-certification, registration and filing requirements for SIPs and SAYE schemes
HMRC annual return filing requirements for SIPs and SAYE schemes
Employment-related securities—reporting obligations
For information on reporting obligations relating to non-employees, see Q&A: If a company grants an option over its own shares to a non-employee...
Share Incentives
PRACTICE NOTES
UK Long-term Incentive Plans: award types, investor and governance requirements, Listing Rules/MAR, FCA/PRA remuneration codes, documentation, limits, vesting, settlement, tax, EBTs and shareholder approval
Types of awards
An LTIP can deliver a range of award forms, and a single plan may include more than one type. Commonly used awards include:
conditional share awards (also known as restricted stock units)
share options
forfeitable shares (often called restricted shares)
stock appreciation rights
Conditional share awards (or restricted stock units)
A conditional share award, or restricted stock unit (RSU), is a commitment to issue shares once specified service and/or performance requirements are achieved. Recipients typically pay no monetary consideration for the shares; instead, they must satisfy the vesting conditions, after which the vested shares are transferred to the holder without further action...
Share options
A share option gives the right to purchase company shares at a predetermined exercise price at a future time, usually once service and/or performance criteria are met. Within an LTIP, options are often granted at nil‑cost or at nominal value, meaning the exercise price is set at zero or at the nominal value of the shares under the option...
Share Incentives
PRACTICE NOTES
UK long-term incentive plans: benefits, design flexibility and risks; IA 2024 guidance and governance expectations; Companies Act 2006 and tax issues; market practice including restricted and hybrid alternatives
A long-term incentive plan (LTIP)
Within listed companies, the term LTIP typically refers to executive share arrangements whereby senior staff receive share-based awards that vest over no less than three years, usually followed by a further two-year holding requirement. For an introduction to LTIPs, see Practice Note: What is a long-term incentive plan? Using LTIPs to drive senior executive performance has become accepted market practice among listed companies. Yet, in July 2016, the Executive Remuneration Working Group—an independent body formed by the Investment Association—issued its final report on the design of executive pay, urging every company to assess whether the conventional LTIP model remained suitable for its business or if it should depart from that approach. In the Working Group’s view, rather than defaulting to an LTIP, companies must identify the structure that best fits their organisation and engage with shareholders to gauge their views on the preferred framework. The emphasis was on careful selection of pay structures and meaningful dialogue with shareholders before settling on any model, rather than adopting LTIPs as the automatic, default option...
Share Incentives
PRACTICE NOTES
UK long-term incentive plans: Income tax and NICs for RSUs, nil-cost options, forfeitable shares and SARs; restricted securities, s430/s431, PAYE, retention periods, employer NICs transfer and reporting
Types of LTIP awards
Under a long-term incentive plan (LTIP), the forms of awards most frequently granted include the following awards:
conditional share awards (which are sometimes also known as restricted stock units (RSUs))
nil-cost options
forfeitable shares, which are sometimes described as restricted stock
share appreciation rights (SARs)
A standard LTIP now commonly contains both a vesting period, typically lasting three years, and an additional retention period of two years, and this Practice Note addresses the tax implications for LTIP awards that have holding periods in place. For more information on each type of award, see Practice Note: Structure of a long-term incentive plan—Types of awards...
Share Incentives
PRACTICE NOTES
UK long-term incentive plans: structures, performance and holding conditions, IA Principles, hybrid schemes, US/UK distinctions, EBT operation, and FCA Listing Rules and directors’ remuneration report definitions
A long-term incentive plan (LTIP)
An LTIP is widely used by listed companies to denote executive share arrangements where senior employees receive share-based awards that vest after at least three years. To meet institutional shareholder voting requirements where approval is needed, such awards are generally conditional on achieving stated performance targets.
With particularly rigorous performance conditions, an LTIP is often labelled a performance share plan (PSP).
In the past, where a particular style of LTIP award was used, some companies called it a restricted share plan.
For companies listed in the equity shares (commercial companies) category of the London Stock Exchange, the Financial Conduct Authority (FCA) handbook provides a specific definition of long-term incentive scheme. See Specific definitions below.
The term LTIP is also employed more broadly to describe any incentive arrangement lasting more than one year, including cash bonus schemes. That broader usage should not be confused with the more generic use of LTIP to describe share incentive arrangements typically aimed at senior executives...
Share Incentives
PRACTICE NOTES
UK sub-plans to overseas share option plans: necessity, drafting and enforceability, including EMI/CSOP/SAYE compliance, HMRC reporting, board/shareholder approvals, alternatives and UK-specific terms
Offering share options to employees internationally
Firms with staff spread worldwide must decide how consistent and harmonised their employee share option scheme should be. It is not a yes-or-no choice, but a spectrum. The decision involves weighing administrative simplicity and fairness against meeting local obligations and expectations in each location. At one end sits a rigid single-plan-for-all with no local tailoring; moving along the range you permit degrees of localisation, through to the far end where there might be a distinct plan per country (or clusters of countries). Each point on that continuum alters effort and the plan’s operation in practice. A universal model is often simpler to run, delivering uniformity and parity among employees, yet it may trigger local compliance challenges. Creating separate local plans enables a business to satisfy domestic requirements and align with employee expectations. The downside is divergent administration and variations in employee treatment, which can be especially difficult where the workforce is highly mobile. Here, a middle path such as a UK sub-plan or a UK addendum can prove useful.
Is it necessary to have a UK sub-plan?
This is the first issue for global companies bringing their share option plan to the UK. As...
Share Incentives
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