UK employees and directors as well as consultants can participate in share plans operated by foreign parent companies. Similarly, UK companies with overseas subsidiaries can incentivise staff overseas with shares in the UK parent. We work with international groups all over the world to help them implement share plans, options, restricted stock units and other forms of share awards.
Problems we solve include:
- Reviewing share plans adopted outside the UK to check they are compliant with UK laws.
- Explaining the taxation implications for UK participants on any share award made.
- Dealing with the UK tax reporting and withholding liabilities and other UK tax compliance issues.
- Tailoring share plan communications for a UK work force.
- Suggesting suitable tax efficient ways to operate share plans in the UK.
Adoption of tax efficient share plans in the UK
The UK offers one of the most comprehensive range of tax favourable regimes for share plans and share options. Companies can chose from setting up a stand alone share plan for UK employees or they can qualify their existing share plan adopted outside of the UK.
Many foreign parents, and in particular US companies decide to qualify their existing share plan to bring it within the UK legislation to attract tax benefits for UK employees. The arrangement operated in the UK on this basis is often referred to as a “sub-plan”. This is because the UK specific requirements form a schedule to the overall parent plan. The terms of the parent plan are left in tact and only qualified for UK purposes. The tax approved CSOP legislation is the most easy of the various UK regimes to adapt and is widely chosen.
We solve the problems around:
- Will the parent share plan qualify for UK tax benefits?
- What are the alternatives if the parent share plan cannot qualify? We do see problems where not all subsidiaries are controlled by the parent. We often find a work around solution.
- The treatment for employees based in several jurisdictions.
- How is the strike price or exercise price calculated in the UK?
- What are the typical vesting provisions used in the UK?
- How are options and restricted stock units taxed in the UK. The UK regime does not always match the rules applicable in the parent country.