Introduction
Direct employees
Can receive NSO?
✅ Yes!
General taxation
Depends on type of share scheme. For EMI: No taxation before sale of the shares, unless exercise price is lower than actual market value of the shares at grant, and as long as no disqualifying events occured.
General tax, reporting & legal paperwork difficulty score
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Tax advantages
Several local tax-favored schemes available, depending on company maturity stage: EMI (Enterprise Management Incentives) in earlier stage companies, then CSOP (Company Share Option Plans) for later stage companies.
EMI (and CSOP) are subject to several conditions, incl. maximum number of employees, equity amount, working time, etc.
Tax-favored schemes require the adoption of a sub-plan to the main equity incentives plan.
Warning point
UK share schemes subject to a lot of formalities (but can be worth it for EMI/CSOP as they are tax favorable)
EoR employees
Can receive NSO?
✅ Yes!
General taxation
Taxation differs depending on contractor’s status. Tax advisor assistance is highly recommended.
General tax, reporting & legal paperwork difficulty score
🤯
Tax advantages
No tax-favored scheme available.
Warning point
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Contractors
Can receive NSO?
✅ Yes!
General taxation
Taxed as income at exercise.
Taxed as capital gain at sale (s431 election required at exercise to avoid part of the gain to be considered as regular income subject to NIC).
General tax, reporting & legal paperwork difficulty score
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Tax advantages
No tax-favored scheme available.
Warning point
UK share schemes subject to a lot of fomalities and are not easy to understand and navigate.
Want to know more about equity in
the
United Kingdom 🇬🇧
?
Discover everything you need to know about taxation and reporting obligations for you and your team in
the
United Kingdom 🇬🇧