ESOPS – Employee Stock Ownership Plans – Taxability

Last two Fridays, in the Learning & Development Group,  we gave you an overview of the taxability of ESOPs in India and the US.

In the UK, the ESOP schemes need to be approved by the government for becoming eligible for tax benefits. In most schemes, there is a minimum holding period, and if an employee sells the shares, the proceeds become taxable.

So, in the UK if your employer offers you company shares as part of a government approved share scheme you get tax advantages, like not paying Income Tax or National Insurance on their value.

The approved schemes are:

–Share Incentive Plans

–Save As You Earn Schemes

–Company Share Option Plans

–Enterprise Management Incentive Schemes

Employee share schemes that aren’t approved by the government don’t have the same tax advantages.

You may have to pay Capital Gains Tax if you sell your shares.

Next week, I will share more details on these plans….