PAYE/NICs net settlement of conditional share awards: CT relief?

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Net settling a share award

Net settling a share award is employed to cut down the quantity of shares a company is required to issue in order to discharge the award. Awards can, in principle, be net settled against both any exercise price due and any tax or National Insurance contributions (NICs) that arise. Key benefits of net settlement include reduced dilution for existing shareholders and the possibility for a company to stretch its headroom under any relevant dilution limits, thereby enabling those limits to accommodate more awards. Net settlement for tax and NICs means the company issues to the award holder a number of shares whose value equals the post‑tax amount they would have retained had they taken the full, gross allocation and sold sufficient shares on‑market to meet the pay as you earn (PAYE) and NICs obligations due at that point in time in practice. The company then settles the PAYE and NICs by remitting a cash payment to HMRC...

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Web page updated on 27/05/2026

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