National insurance is charged where the shares are readily convertible assets. Where the option can be exercised more than ten years after it is granted, income tax may be charged on the grant of the option. The charge is on the market value of the shares at the date the option is granted, less the price to be paid for the shares on exercise and any amount paid for the option. Any income tax paid at this time can be deducted from the tax payable when the employee exercises the option. There is no charge if the option is granted at a price equal to the market value of the shares at the grant date.
National insurance is charged if the shares are readily convertible assets.
The amount paid for the shares, The amount paid for the option, and Any amount taxed as income because the shares were bought for less than their market value. Where the shareholder receives a special benefit. Despite the tax charges, some companies have successfully operated unapproved employee share schemes for many years. Their main advantage is their flexibility, because they do not have to conform to the statutory conditions imposed upon approved schemes. This guide sets out the various schemes available and their advantages and disadvantages.