We are all fairly familiar with the concept that any shares gifted to an employee at undervalue is subject to income tax and potentially NIC.
We have the situation whereby a company has been trading for 10 years, it is moderately profitable and the ordinary shares are valued on an earnings basis at £1m.
The company would like to incentivise a senior manager with shares on the basis that he participates in the future earnings and capital growth of the company.
They propose to issue ordinary B shares to the employee which have a right to dividend, zero rights to vote and rights to assets should the value of the shares exceed £1m in the future.
Any tax problems?