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HMRC internal manual

Capital Gains Manual

Employee share schemes: introduction: approved v unapproved schemes

Certain employee share schemes may be approved by HMRC under specific statutory provisions. Employees, directors and company office holders who receive shares or share options under such a scheme may not be liable to Income Tax charges on employment income which would otherwise arise. Enterprise Management Incentives (EMI) do not require prior approval but may also escape certain Income Tax charges. Approved schemes and EMI are thus sometimes referred to as being ‘tax advantaged’ schemes.

The absence or reduction of an Income Tax charge that would otherwise arise may, in turn, affect the Capital Gains Tax position. In dealing with any particular case you will need to establish, at the outset, whether or not the shares or share options are acquired under an approved scheme or EMI. See CG56400+.

Shares or securities received by reason of employment but not under a tax advantaged scheme may be referred to as having been received under an unapproved scheme.

If, or to the extent that, the computational modifications for a tax advantaged scheme do not apply, you follow the normal Capital Gains Tax rules that apply to employment-related securities generally. See CG56320+.