Employee Incentives and Employment Tax overview

Providing a highly effective service covering all forms of employee incentives and employment tax issues

Our Employee Incentives and Employment Tax team advises on how best to structure, document, establish and operate all forms of employee incentive arrangements. We work for both quoted and unquoted companies, and also for companies undertaking flotation (whether a full listing or on AIM).

Our advice encompasses employer and employee tax, company law, corporate governance and regulatory issues arising out of such arrangements (whether share-based or cash-based). Our team also advises listed companies on the application of the Listing Rules, Prospectus Rules and the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations relating to directors' remuneration reports. We liaise, where appropriate, with representatives of institutional investors (including the Association of British Insurers and PIRC).

In addition, we are able to advise on the impact of all types of corporate transactions (including takeovers and rights issues) on the rights of participants in employee incentive arrangements.

We specialise in advising on the complex tax issues that can arise wherever an employee receives shares in their employer, in particular advising management teams and investors on the structuring of the managers’ equity in MBO and other private equity transactions.

We also advise on all matters relating to the taxation of employees and directors (including PAYE, National Insurance contributions and capital gains tax), including those arising on termination of their employment or office.

Our latest alerts, briefings & reports
Bank payroll tax   In his Pre-Budget Report on 9 December, the Chancellor of the Exchequer, Alistair Darling, introduced a new bank payroll tax with immediate effect, designed to inhibit the payment of excessive bonuses in the banking industry. This has been greeted within the banking community with a sense of outrage and unfairness, but not surprise given recent Government public pronouncements.  View full briefing
Proposed changes to EMI eligibility: Relaxation of requirement to trade wholly or mainly in the UK   Companies with significant non-UK activities but with a permanent establishment in the UK may soon be eligible to grant enterprise management incentive (EMI) options to employees under a proposed amendment to the EMI legislation announced by the Treasury on 20 August 2009. A company's ability to grant tax-favoured incentives as a component of employees' remuneration can be key to the recruitment and retention of employees, especially in view of the current economic climate and the forthcoming increase in income tax rates for higher earners. The change: will mean that a company will no longer have to carry out its activities "wholly or mainly" in the UK to be eligible to grant EMI options; will benefit UK companies with substantial overseas activities and overseas companies with UK tax-paying employees; is expected to apply to EMI options granted on or after 6 April 2010. View full briefing
The British Bankers' Association and the ABI respond to the FSA consultation on reforming remuneration practices   The British Bankers' Association (the "BBA") and the Association of British Insurers (the "ABI") have published their responses to the Financial Services Authority ("FSA") consultation on reforming remuneration practices, including the draft code of practice on remuneration policies (the "Code"). The Code sets out one general requirement that remuneration policies must be consistent with effective risk management. This requirement is supported by ten remuneration principles aimed at evidencing compliance with the general requirement. Both the BBA and the ABI support the objective of the Code, to improve the risk management of remuneration in the financial services sector, however, the following areas of concern have been identified: The potentially negative impact of the Code on the competitiveness of financial institutions in the UK compared with financial institutions in the rest of the world. The lack of flexibility in the application of the Code which fails to address the diversity of the institutions within the financial sector. The level and nature of bonus deferrals. The role and responsibilities of remuneration committees in implementing the Code.  View full briefing
FSA Consultation: Reforming remuneration practices in financial services   Between November 2008 and January 2009, the Financial Services Authority ("FSA") undertook a review of remuneration practices in a group of major UK-incorporated banks and building societies to consider the extent to which remuneration practices may have contributed to the current economic downturn. Following that review, the FSA published a draft code of practice on remuneration policies (the "Code"), a revised version of which was published on 18 March 2009 as part of a consultation paper (CP09/10) issued by the FSA. View full briefing
The new tax penalties regime    Following the merger of the Inland Revenue and HM Customs and Excise, HM Revenue and Customs (HMRC) began a consultation process to review the existing tax penalties regimes and to consider the introduction of a new penalty system for tax errors designed to make the tax system simpler and more consistent. View full briefing
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