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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
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Specific deductions: employee share schemes: glossary

Glossary of terms used in this section

A, C, D, E, F, G, L, M, P, Q, R, S, U, V

## {#A}A  
   
Approved scheme Share award or share option scheme approved by the Employee Shares and Securities Unit, which gives favourable tax and NICs advantages to employees and employers
## {#C}C  
Company Share Option Plan (CSOP) Tax-advantaged discretionary share option scheme approved by the Employee Shares and Securities Unit
Conditional share award An award of a number of shares of which the employee will become the owner at a future date if specified conditions are met
## {#D}D  
Discounted option A share option which gives the option-holder the right to buy shares at an exercise price lower than the market value of the shares when the option was granted
## {#E}E  
Employee Benefit Trust (EBT) A trust set up by an employing company or its group parent company to provide employees with benefits which may take a variety of different forms
Employee share ownership trust (ESOP trust or ESOT) A trust set up by an employing company or its group parent company to provide employees with benefits in the form of shares or options over shares in that company
Enterprise Management Incentive (EMI) option Option over shares in an EMI company which qualifies for tax advantages
Exercise of option When the option-holder uses the rights under the option to buy shares at the option exercise price
Exercise price Price at which the holder of a share option has the right to buy shares
## {#F}F  
Forfeitable shares Shares given to employees subject to a risk that they may have to be forfeited if specified conditions are not met during a forfeiture period
Forfeiture period Period during which employees holding forfeitable shares are at risk of having to forfeit them if specified conditions are not met during the period
## {#G}G  
Grant of option Giving the option-holder a right to acquire shares in the future - options must be granted under seal or deed or for consideration (usually a nominal amount such as £1)
Group scheme An employee share scheme set up by the parent company of a group under which share-related benefits are provided to employees of nominated companies in the group
## {#L}L  
Long Term Incentive Plan (LTIP) Term often used for a conditional share award scheme or a scheme providing employees with forfeitable shares
## {#M}M  
Market value option A share option which gives the option-holder the right to buy shares at an exercise price equal to the market value of the shares when the option was granted
## {#P}P  
Performance conditions Conditions or targets which must be satisfied during a specified performance period before employees can acquire shares under conditional share awards or by exercising share options
Performance period Specified period over which performance conditions or targets, to which share awards or share options may be subject, must be met
Phantom share option A right to receive a payment in cash (not shares) based on the increase in value of a set number of shares over a set period
## {#Q}Q  
Qualifying employee share ownership trust (QUEST) A trust that met certain qualifying requirements such that favourable tax treatment was given for employers’ contributions to QUESTs (only relevant to accounting periods starting before 1/1/2003)
## {#R}R  
Replacement option A new share option granted in exchange for the surrender of an old option, usually when the company whose shares were the subject of the old option is taken over (see Rollover of options)
Restricted shares Shares acquired by an employee which are subject to restrictions (such as restrictions on voting or dividend rights, or the employee’s ability to sell the shares). Includes forfeitable shares
Rollover of options When an old option is exchanged for a new option, usually over shares in a new parent company following a takeover (see Replacement option)
## {#S}S  
SAYE share option scheme Tax-advantaged all-employee share option scheme approved by the Employee Shares and Securities Unit
Share award An award of a number of shares of which the employee will become the owner at a future date, usually if certain conditions are met (see Conditional share awards)
Share Incentive Plan (SIP) Tax-advantaged share award scheme approved by the Employee Shares and Securities Unit
Share option A right to acquire a set number of shares at a set price during a set period
Single company scheme An employee share scheme set up by an employing company under which benefits in the form of shares or options over shares in the employing company are provided to its employees
## {#U}U  
Unapproved scheme A share award or share option scheme which does not qualify for favourable tax and NICs advantages given to approved schemes
Underwater option A share option whose exercise price is higher than the current market value of the shares
## {#V}V  
Vesting When conditional share awards become unconditional