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Companies engage in more complex planning for their share incentive arrangements for a number of reasons. These include funding issues for participants where:

1. •

   the initial value of an award is relatively high

2. •

   companies are having to deal with headroom issues (ie they may have reached their limits on shareholder dilution)

3. •

   companies wish to take advantage of potentially beneficial tax treatment for their employees where such companies do not qualify for statutory tax advantaged plans which satisfy the requirements of ITEPA 2003, Schs 2–5 (the qualifying plans), including Enterprise Management Incentives (EMI) and company share option plan (CSOP)

As such, more complex plans aim to provide a share-based award for employees with a low initial value but with the potential to generate growth in the shares that is subject to capital gains tax rather than income tax.

This note looks at two different structures often used to achieve this aim by summarising the commercial considerations, an outline of the structure and briefly discusses the tax treatment of each:

1. •

   jointly