William Cookson
Will Cookson is head of Partner Structures, Development & Guidance at St. James's Place Wealth Management, having previously been an employee share plans specialist with PwC, Harbour Key, Mazars, Grant Thornton, GE Capital and EY.
Practice Area
Panel
- Contributing Author
2 Contributions by William Cookson
PRACTICE NOTES
Individual shareholders settling employee share options: UK company law, FSMA exemptions, plan design, dilution, and tax including CGT, IHT, PAYE and NICs, disguised remuneration, plus accounting and ERS reporting
A share option gives an employee a binding right to purchase shares at a fixed price, provided specified conditions are met. The option agreement between the grantor and the employee will usually also state who must procure the shares and settle the option when it is exercised. Shares are commonly provided either by the company or by an authorised third party entitled to grant an option, such as an individual shareholder, corporate shareholder, or a trustee of an employee benefit trust (EBT). A third-party shareholder can also agree to fulfil options granted by the company by transferring their own shares on exercise of the options.
This Practice Note considers the situation where a UK tax resident individual is the one who satisfies the share option and specifically examines:
reasons an individual may choose to make their shares available
procedural steps and paperwork
non-tax factors relating to the individual’s holding
tax implications
accounting impacts and share plan reporting
scenarios involving more than one individual shareholder
leaving shares by will
Typically, the individual shareholder will dispose of their shares for the exercise price specified in...
Share Incentives
PRACTICE NOTES
Parallel Options in UK Employee Share Schemes: HMRC acceptance, EMI/CSOP interactions, tax-efficient design and underwater-option fixes, plus practical and IFRS 2 accounting considerations
The aim of this note is to set out the principal areas in which parallel options are commonly useful, how they interact with other share incentive arrangements, HMRC’s acceptance of such plans and the practical considerations around implementation. The main application of parallel options is either to add tax efficiency to an unapproved share incentive arrangement or to address issues within existing arrangements such as underwater options. Practitioners should exercise particular care when putting in place parallel options that involve a tax-advantaged scheme such as an enterprise management incentives (EMI) scheme or a company share option plan (CSOP). The key points are highlighted below (together with HMRC’s published views).
What are parallel options?
Parallel options are employee share option arrangements that are linked to another employee share incentive scheme. They will typically be introduced either to enhance another share plan, eg deliver tax efficiency, or to help ‘fix’ problems with the main incentive scheme, eg where options are underwater. They can relate to either phantom options or options over actual shares...
Share Incentives
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