Establishing a JSOP and tax treatment

What is a JSOP?

Jointly owned shares are no more and no less than their description implies, namely shares owned jointly by an employee or director and a third party, either an investor in the company or, more commonly, the trustees of an employee benefit trust (EBT) .

The concept of joint share ownership was developed in the early part of this century as an alternative to other forms of shares incentives such as share options, restricted shares or performance shares plans (often using nil cost options).

The benefit delivered under a joint share ownership plan (JSOP) award is equal to the increase in share value post-grant, and therefore, a JSOP award is commercially similar to an unapproved market value share option but is designed to be delivered via a more tax-efficient structure.

When structured and implemented correctly, any gain realised under a JSOP award should be subject to capital gains tax (CGT) rather