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HMRC internal manual

Capital Gains Manual

Approved employee share schemes: introduction

Certain employee share schemes may be approved by HMRC under specific statutory provisions. At the time of writing there are three types of approved share schemes and also the Enterprise Management Incentives. With all four, employees and directors who receive shares or share options under their provisions may not be liable to certain of the Income Tax charges under employment income that would otherwise arise. They are sometimes referred to as tax advantaged schemes. The Capital Gains Tax position of the employer and employees may also differ from that in unapproved schemes. The following sections describe the various types of scheme, and the CGT consequences.

A further type of approved scheme; the approved profit sharing scheme, was phased out following the introduction of the approved Share Incentive Plan.

The paragraphs that deal with them are as follows:

  • Company Share Option Plans (CSOP) previously called `discretionary’ or `executive’ share option schemes CG56410-CG56433
  • approved SAYE share option schemes (sometimes called `all employee’ or savings-related share option schemes) CG56450-CG56451
  • Enterprise Management Incentives (EMI) CG56440-CG56449
  • approved profit sharing schemes CG56470
  • approved Share Incentive Plans (SIP) CG56490-CG56497.

Applications for the approval of employee share schemes are dealt with by Specialist Personal Tax, Employee Shares & Securities Unit, Nottingham Team, 1st Floor, Ferrers House, Castle Meadow Road, Nottingham NG2 1BB.

Guidance on both approved and unapproved share schemes and requirements for approval and reporting is available at .

Enterprise Management Incentives do not require approval but the grant of an EMI option must be notified to HMRC within 92 days. Notifications are dealt with by the Small Company Enterprise Centre at the above address in Nottingham.