How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask TaxRobin Your Own Question

TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 14457
Experience:  International tax
14155347
Type Your Tax Question Here...
TaxRobin is online now

is there a way of issuing shares to an employee without the

Resolved Question:

is there a way of issuing shares to an employee without the employee incurring immediate income tax liability? we do not want to issue options just outright shares. I understand there are share incentive plans which allow up to £9,000 of shares to be issued with no income tax. Is there any other methods? thanks
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
and thank you me to assist you.
There a few ways that you can give shares to an employee. They have different tax situations.
1)If you give shares through a Share Incentive Plan (SIP) and the employee keeps them in the plan years they won’t pay Income Tax or National Insurance on their value.
You can give the employee up to £3,600 of free shares in any tax year.
2)The employee can buy shares out of their salary before tax deductions. There’s a limit to how much they can spend - either £1,800 or 10% of their income tax year, whichever is lower. You can can give them up to 2 free matching shares partnership share they buy.
They can buy more with the dividends. They won’t pay Income Tax if they keep the dividend shares least 3 years.
3)The Company Share Option Plan lets you give them the option to buy up to £30,000 worth of shares at a fixed price.
The employee won’t pay Income Tax or National Insurance contributions on the difference between what they pay shares and what they’re actually worth. Of course when they sell they will have CGT.
4)If the company has assets of £30 million or less, you may be able to offer Enterprise Management Incentives (EMIs). This is a buying option too though so you may not want to use it. The employee can buy shares of up to £250,000 without paying Income Tax or National Insurance on the difference between what they pay shares and what they’re actually worth.
As you can see there are many ways employee to receive shares.
Shares offered outside of these schemes won’t have the same tax advantages NI and tax.
Customer: replied 2 years ago.

, thank you reply. However, in my question I stated that I already knew about share incentive plans and I did not want to issue share options so most of your answer has repeated what I did not request.

The company has assets of more than £30m so the EMI is not relevant.

I need to find a way of just issuing shares to employees. is there a way of doing this though trusts? or offshore schemes? it needs to be more creative than the text book ideas which I have already found anyway.

appreciate your help if you can provide this.

thanks

Robert

Expert:  TaxRobin replied 2 years ago.
You could have an employee benefit trust and that could be offshore but the shares are not directly owned by the employee.
HMRC has anti-avoidance legislation so that out right gifting of shares is not really a legal option.
If gift the shares and do not expect the employee to pay anything shares (except the nominal par value which is required) you will need to provide the employee with the cash required to pay the tax bill and this will be a payroll cost.
You could give the employee a bonus which is applied in satisfaction of the tax liability.
Bonus payments do attract PAYE and NI but you would have a claim to corporation tax.
Customer: replied 2 years ago.

thanks reply, please could you explain then the consequences of the employee benefit trust and how that would work to be able to issue shares?

thanks

robert

Expert:  TaxRobin replied 2 years ago.
First you need to know how HMRC views these:
HM Revenue and Customs state that when forming an EBT scheme, you must AVOID the following:
Payment of bonuses via an offshore trust.
Payment of remuneration by way of loans, which may be written off before they become repayable.
Create an offshore ‘moneybox’ / shareholders of close companies.
Allowing employees to use assets (such as cars) owned by the EBT, the costs of acquiring which would be capital expenditure if they were owned by the employing company.
Providing benefits in the form of shares (not in the employing company) whose values can be most easily manipulated before or after they are transferred from the EBT to employees or directors.
Assets committed to the EBT (in this case shares) are done so benefit of all past and current employees, with no specific employees having rights over the assets. This is why I said the employee does not actually own the shares. The employee is taxed ( via PAYE) upon receipt of the asset distributed by the trust.
You asked less then text book option and that is one butyou would be advised to seek additional advise and guidance from your own solicitor.
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 14457
Experience: International tax
TaxRobin and other Tax Specialists are ready to help you

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions