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Employers may operate share schemes and/or share options schemes to allow employees to acquire a stake in the company in which they work. Under a share scheme the employee is provided with shares in the company in which they work. By contrast, under a share option scheme, an employer grants to an employee an option to buy a specified number of shares at some future time at a price fixed on the date on which the option is granted.
Tax-advantaged schemes confer tax advantages but these are contingent on strict conditions being met. Save As You Earn (SAYE) Share Option Schemes, Company Share Option Plans (CSOPs), Share Incentive Plans (SIPs) and Enterprise Management Incentives (EMIs) are tax-advantaged schemes. Employers can also provide shares and share options by means of an unapproved scheme. Unapproved schemes lack the tax advantages of tax-advantaged schemes but are not constrained by the conditions, so offer greater flexibility.
This topic looks at the different types of share and share option schemes.
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