Equity Incentives for Employees: Share Options and Share Awards

Session 1 – Choosing the right incentive

• Why companies incentivise with equity: retention, recruitment, alignment and succession
• Shares now or options later – the fundamental choice, and its cash-flow and dilution consequences
• Understanding the options: tax-advantaged schemes, unapproved options, growth and hurdle shares, and nil or partly paid shares
• The decision framework: company size and status, employee population, exit horizon and appetite for complexity

Session 2 – The employment-related securities regime

• Why Part 7 ITEPA 2003 catches almost every award, and the breadth of the ‘by reason of employment’ test
• Restricted securities: the charge on acquisition, the Chapter 2 chargeable events and the role of the section 431 election
• Convertible securities and artificially depressed or enhanced value in outline
• The annual ERS return: registration, the 6 July deadline and the penalties for getting it wrong
• Case study: the ERS consequences of a share award to a key manager

Session 3 – Share awards and non-statutory alternatives

• Growth shares: how they work, why the up-front value is low, and the valuation and drafting points that matter
• Alphabet and dividend-only shares: flexibility, the settlements risk and the employment-related securities overlay
• Unapproved options and direct share awards where the statutory schemes do not fit
• All-employee plans in outline: the Share Incentive Plan (SIP) and Save As You Earn (SAYE)

Session 4 – Tax-advantaged share options: EMI and CSOP

• Enterprise Management Incentives: the company, employee and share conditions
• EMI in practice: agreeing valuation with HMRC, notifying the grant by 6 July following the tax year of grant, and disqualifying events
• Company Share Option Plans: the £60,000 limit and the relaxed conditions following recent reform
• Tax treatment on grant, exercise and sale, and the interaction with business asset disposal relief
• A side-by-side comparison of the main structures
• Exercise: computing the tax outcome on an EMI exercise and sale

The course trainer is a Director and Head of Corporate Tax at a specialist tax boutique that advises owner-managed and growth businesses and their professional advisers. A Chartered Accountant (FCA) and Chartered Tax Adviser (CTA), he has extensive experience of corporate tax for owner-managed businesses and leads the corporate tax team’s advisory work.

His specialisms cover the full range of employee share incentives addressed in this course, from EMI and CSOP options to growth shares, together with the employment-related securities rules in Part 7 ITEPA 2003. Alongside his work on corporate reconstructions and demergers, he advises regularly on the design, valuation and implementation of share schemes, on agreeing valuations with HMRC, and on the tax issues that arise for employees and companies on a later sale.

He is a prolific writer and presenter on corporate tax, contributing to Tax Journal, Taxation, Tax Insider and ICAEW Taxline among other specialist publications, and hosting The Tax Hour podcast. He delivers continuing professional development regularly to accountants, tax advisers and solicitors, and is known for a practical, example-led style that turns technical detail into decisions delegates can apply to their own client work.

• Identify the most appropriate incentive for a given client, weighing commercial objectives, dilution, cash flow and the tax position of both company and employee.
• Compare the tax-advantaged statutory schemes – EMI, CSOP, SIP and SAYE – with the non-statutory alternatives such as growth shares and unapproved options.
• Apply the qualifying conditions and tax treatment for EMI and CSOP options, including valuation, notification and disqualifying events.
• Recognise the employment-related securities charges that arise on acquisition, on chargeable events and on disposal under Part 7 ITEPA 2003.
• Evaluate when a section 431 election should be made, and explain its effect on the tax position.
• Navigate the annual ERS reporting obligations, together with the deadlines and penalties that apply.
• Calculate the income tax, National Insurance and capital gains tax outcomes of an EMI grant, exercise and sale, including the interaction with business asset disposal relief.

• Accountants in practice advising owner-managed and growth companies
• Tax advisers and tax managers dealing with share schemes and shareholder issues
• Solicitors advising on company reorganisations and equity incentives
• Corporate finance and advisory professionals involved in structuring incentives
• Company directors and finance directors considering an incentive for their team

This half-day course is a practical, decision-led guide to rewarding and retaining employees with equity, covering the tax-advantaged statutory schemes and the non-statutory alternatives side by side.

Through worked examples and a case study, it works through choosing the right structure, the employment-related securities rules that catch almost every award, and the reporting that follows.It is aimed at accountants, tax advisers and solicitors who advise owner-managed and growth companies and want a confident working knowledge of employee share incentives.