Management incentives

Name some management incentives

Cash bonus

Share options

Non-tax advantaged options

CSOP

Tax implications of cash bonus

Employees suffer IT and EE NIC at marginal rates

Company suffers ER Class 1 NIC but CT deduction available

What are the limits to CSOPS?

An employee can not be issued options above value of £60k

Rule with grant of CSOP?

cannot be issued at a discount

Why are CSOPs unlikely options?

Small value of shares can be issued

Tax rate is likely 24% as share unlikely to have been held for required 2 years

What are the conditions for EMI company?

Less than 250 employees

Gross assets not more than 30m

What are conditions for EMI qualifying employee?

Work for the company for an average of 25 hours per week or 75% of their working time

Cannot be awarded options with MV of £250k

Total limit of EMI options granted?

£3m

when does a company qualify for EMI CT deduction?

If options exercises prior to sale or within 90 days of a takeover

What needs to happen when EMI options are granted?

They need to be notified to HMRC

The MV of the shares can be agreed with HMRC