Unapproved options and phantom share awards/SARs

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Unapproved options

Share options are rights to acquire shares which can be exercised when certain conditions have been met (such as the passing of a time period or the occurrence of an event), provided that the option holder pays a specified amount to acquire those shares at that time.

The term 'unapproved option' is used to refer to any share option which was not granted under any of the statutory tax-advantaged option schemes (being a company share option plan (CSOP) or enterprise management incentives (EMI) scheme or save as you earn scheme (SAYE)), and originates from when CSOPs and SAYEs had to be formally approved by HMRC before they could receive the associated statutory tax reliefs. For now, the term continues to be used—despite the fact that, since April 2014, it is no longer necessary to obtain HMRC approval to any statutory tax-advantaged scheme. However, the term ‘non-tax advantaged options’ is also increasingly being used in place of ‘unapproved options’.

Unapproved options are the most widely used form of employee share incentive. They offer flexibility for a company as they can be designed

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Latest Share Incentives News

Share Incentives weekly highlights—19 December 2024

This week's edition of Share Incentives weekly highlights includes (1) the announcement by ISS Governance of its new 2025 benchmark policy updates, (2) the FCA’s publication of its consultation paper on the proposed regulatory framework for the Private Intermittent Securities and Capital Exchange System (PISCES), (3) the Lexis+® UK Practical Guidance and Market Standards Trend Report reflecting on the voting patterns displayed during the 2024 AGM season, (4) HMRC’s publication of minutes of a subgroup meeting on changes to taxation of non-domiciled individuals, and (5) a new Q&A in respect of employee ownership trusts with a corporate trustee.

Share Incentives weekly highlights—12 December 2024

This week's edition of Share Incentives weekly highlights includes (1) in relation to employee benefit trusts, the cases of JTC Employer Solutions Trustee Ltd v Garnett and also MR Currell Ltd v Revenue and Customs Commissioners, (2) the Welsh Government publishing its Budget for 2025–26, and (3) a consultation published by the Financial Conduct Authority which includes proposals for updating the FCA’s Handbook to align with the new edition of the UK Corporate Governance Code that was published in January 2024.

Share Incentives weekly highlights—5 December 2024

This week's edition of Share Incentives weekly highlights includes (1) an update on the progress of Finance Bill 2025 and the National Insurance Contributions (Secondary Class 1 Contributions) Bill in the House of Commons, (2) the 2025/26 Scottish Budget and (3) the case of Simrajsar Ltd and another v Revenue and Customs Commissioners, in which the First-tier Tax Tribunal concluded that termination payments constituted taxable earnings.

Share Incentives weekly highlights—28 November 2024

This week's edition of Share Incentives weekly highlights includes (1) the CIOT’s response to the employee ownership trust provisions of the draft Finance Bill 2025, (2) proposals by the PRA and FCA of significant reforms to dual-regulated firms' remuneration regime, (3) the FRC’s annual review of corporate governance reporting, and (4) HMRC’s Employment Related Securities Bulletin 58.

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