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Consider the options
KEY POINTS
- Do not confuse the various schemes.
- Employee share schemes can help to retain and motivate staff.
- Generally no income tax arises on exercising the option.
- If shares are not readily convertible assets income tax is collected through self-assessment and no NI is payable.
- Shares may be transferred into an ISA.
Share option schemes are an important topic in the Association of Taxation Technicians’ exams. They are regularly examined in both Paper 1 and Paper 3. Questions often require an understanding of non-tax advantaged schemes and the three types of tax advantaged schemes. Examiners often report that candidates confuse the schemes or apply a particular one in the wrong circumstances. So the aim of this article is to clarify the key features and application of each of the tax...
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