Topical Tax: Employee tax planning with share options. By Paula Tallon

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Paula Tallon of Chiltern examines some recent questions handled by her team of specialist tax advisers.


My client owns 100% of the shares in a property investment company. He has one key employee and he would like him to have an equity stake. He wants the employee to have 15% of the shares in two years' time but at todays price (100,000). As the price is likely to increase to 150,000 there will be a tax charge in two years time. Is there a better way to structure this?


Under the current arrangement your client will sell the shares for 100,000 when they have a market value of 150,000. His gain will be calculated using the 150,000 figure. The employee will be receiving shares at an undervalue so he will have an income tax charge on 50,000.

It would be...

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