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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Introduction to Tax Advantaged Share Schemes: Employee Shares and Securities Unit (ESSU) - What we do

The Employee Shares and Securities Unit:

  • Maintains policy on the employment-related securities legislation and tax advantaged employee share scheme legislation,
  • Provides technical support and advice on the application of the employment-related securities legislation,
  • Handles operational work on the monitoring of share award and share option schemes that have tax and NICs advantages and undertakes initial risk assessment for compliance purposes on all information provided by companies on employment-related securities, passing information on taxable events to Risk and Intelligence.

There are currently four HMRC ‘tax-advantaged’ schemes that provide employees and employers with income tax and National Insurance advantages. These are: -

Schedule 2 Share Incentive Plan (SIP) (ETASSUM20000),

Schedule 3 Save As You Earn (SAYE or Sharesave) (ETASSUM30000),

Schedule 4 Company Share Option Plan (CSOP) (ETASSUM40000), and

Enterprise Management Incentives (EMI) (ETASSUM50000)

Shares acquired under these schemes are generally free from income tax and National Insurance contributions.

The acquisition of shares and securities in connection with an employment other than through one of the above schemes are commonly referred to as ‘non tax advantaged’ or ‘taxed’ schemes’. What this means is that neither the employee nor the employer benefit from any income tax or National Insurance advantages.