Discounted Share Option meaning

Given the intricate rules that govern business asset disposal relief (BADR) and the regime that sets the tax treatment of enterprise management incentives (EMI) options, and the way these frameworks interact, the point at which an EMI option is exercised and the exercised shares are then sold is pivotal in establishing whether the full relief for the EMI option and BADR will be obtainable to a taxpayer. A table below outlines the income tax, National Insurance contributions (NICs) and Apprenticeship Levy (AL) position for EMI options at grant and at exercise, and the capital gains tax (CGT) plus BADR outcome on the disposal of shares acquired through exercising EMI options, varying according to when the option is exercised and when the shares are sold. For the purposes of this table, the following assumptions have been made: the share options were issued after 6 April 2013 and are qualifying EMI options, exercised on or after 6 April 2026 within the 15-year period from the date of...

Background and current UK listing regime A major overhaul of the UK listing framework took effect on 29 July 2024, removing the premium and standard segments and introducing a single listing category for equity shares issued by commercial companies. This consolidates the regime, replacing dual segments with a unified route to listing. The commercial companies category is disclosure-led and sits alongside other listing categories, namely shell companies, secondary listing and closed‑ended investment funds. To implement the reforms, a new UK Listing Rules sourcebook came into force and the previous Listing Rules sourcebook was revoked. For details, see Practice Note: Reform of the UK listing regime—fundamentals. The updated regime made no substantive changes to the rules and guidance governing the adoption, approval, operation of and disclosure in respect of employee share incentive schemes, other than the removal of the premium and standard listing segments. However, all relevant rules have been re-numbered within the new UK Listing Rules sourcebook to reflect the structure. The position for employee share incentives is...

Although the enterprise management incentives (EMI) qualifying conditions are very stringent, the income tax, National Insurance contributions (NICs) and apprenticeship levy outcomes for qualifying EMI options can be highly beneficial. This Practice Note outlines the income tax, NICs and apprenticeship levy treatment of qualifying EMI options, as set out in sections 527–541 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). For an account of the capital gains tax treatment of EMI options, see Practice Note: EMI—CGT, which also covers business asset disposal relief and corporation tax relief. For a fuller explanation of the business asset disposal relief rules for EMI options, see the Practice Notes: Business asset disposal relief and enterprise management incentives (EMI) schemes, together with the Table that summarises the income tax, National Insurance contributions (NICs), capital gains tax (CGT) and business asset disposal relief (BADR) treatment of enterprise management incentives (EMI) options and shares. Income tax—basic principles Income tax is a charge on income, but not every type of income falls within...

[ Insert date of letter ] [ Insert name of employee ] [ Insert address of employee ] Dear [ insert name of employee ] [ Insert name of Company ] ( Company ) Option to be granted under the [ insert name of EMI scheme ] (the Scheme ) I am pleased to inform you that the directors of the Company have authorised the award of an enterprise management incentives (EMI) share option to you under the Scheme ( Option ). I enclose a copy of the rules of the Scheme and the option agreement, both of which must be executed by you and the Company so that the grant of the Option can take effect...