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Tax implications of awarding shares to non-employees

Shared from Tax Insider: Tax implications of awarding shares to non-employees
By Jennifer Adams, July 2024

Jennifer Adams considers the tax implications of shares in a family company being awarded or gifted to family members of employees. 

The employment-related securities legislation deals with arrangements involving shares and securities provided by reason of employment where the full value of the employment reward provided to the employee is not included in the salary package and is charged to tax.  

The basic rule is that should an employee or director be given shares for free or pay less than the market value of the shares at the time of the award, a charge to income tax (and possibly National Insurance contributions (NICs)) will arise (under ITEPA 2003, s 62). The tax charge will be the difference between the market value and the price paid by the employee.  

However, various tax-efficient share option schemes are available, which are intended to encourage employees and directors to participate in their

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