In the current labour market, employers are looking for ways to attract and retain employees through remuneration strategies and in particular long term incentive schemes. Long term incentives such as employee share and option schemes have become a common way of retaining key talent in the organisation as well providing a means by which these key employees can also become equity stakeholders.
The taxation of employee share and option schemes can be relatively complex and this paper seeks to provide a summary of the key principles of Division 13A of the 1936 Act as well as its interaction with the capital gains tax (CGT) legislation. The paper also details some recent developments in this area as well as planning opportunities.