Contractor receiving share options in own name

Can you please outline the tax considerations of a Ltd company contrator receiving share options

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Grateful for advice on how a Limited company contractor can receive share options as part payment - eg the day rate is £500 per day and on top of this £50 of share options are received in the contractor's own name.  What tax considerations are there? (corporate tax, VAT, personal tax etc)  Is it more efficient to keep the Options or should these be vested straight away?  Many thanks

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Stepurhan
By stepurhan
28th May 2019 16:56

That is a complex question, and not one to be answered lightly on a free forum. So much depends on the detail.

The most obvious question is why a company would want to grant options in the first place. If the contractor is unconnected, then there is no obvious reason to effectively offer them some level of control.

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By conbyp
29th May 2019 09:08

Many thanks for your reply. Reason for the options is just as an incentive for the longer term, the contract will likely turn into perm work within a year.

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By paul.benny
28th May 2019 17:04

Initial thoughts
1) Granting options to the worker may give HMRC grounds to argue that s/he is really an employee

2) if an employee receives money or money's worth by reason of they employment, PAYE should be applied - whether that is by client or contractor's company depends on 1)

3) Keep or vest options? Depends on 1) and 2)

4) How are options valued? Presumably this is an unquoted company

You and the client company need some (paid-for) professional advice from an accountant who can gather the full facts and advise accordingly.

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By conbyp
29th May 2019 09:10

Many thanks for the reply. Hadn't realised all the complexities so yes, will engage with an accountant directly for professional advice. Kind of you to respond, it's appreciated.

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