An employee was paid low wages whilst a business got off the ground. It was always agreed that he would become a shareholder once the business took off. It has now been agreed that he is to get 1/3 of the company. The company had no value whilst the business was been developed as it was an all or nothing project. It has been successful and now has a value.
If the company is now worth £500,000 how can the tax be minimised?
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I am no expert
But I suspect that he should have been given a formal share option at the outset. Ages since I have done this but from memory this would have fixed the value at the start date. Others will know more!
It sounds to me like he is
It sounds to me like he is just going to be given a share of the company in return for his ongoing services.
Assuming the company isn't listed and that there isn't an impending sale of the shares, then this would be a BIK in the hands of the employee at the date the shares are transferred.
There'll also be a capital gain for the person transferring the shares. ER and holdover relief may be available.
As the above poster has said - I'm also no expert on this though, and there could be a couple of options available, although these may be quite limited for unlisted companies for the value of shares to be transferred (£167k) you are referring to.