Posted by Nick Day on 07 Aug 2012

Office of Tax Simplification (OTS) reports on unapproved share schemes

The Office of Tax Simplification was established in July 2010 to carry out reviews in order to provide independent and specialist advice to the Chancellor on ways to improve and simplify the UK’s tax system.

Following an earlier report on tax-approved employee share schemes, the OTS has published an interim report on possible recommendations to improve unapproved employee share schemes that do not provide specific tax benefits.

Comments on the report and the evidence gathered for this review should be sent to by the 28th September.  A final report including the OTS’s recommendations will be issued prior to the 2013 Budget.

John Whiting, Tax Director of the Office of Tax Simplification said:

“Many businesses have told us that these arrangements are important in aligning employee reward with how the business is doing and help with staff retention. At the same time, they regularly cite technical difficulties or administrative burdens. We will now start to look for solutions to facilitate use, and will put forward common sense recommendations in due course.

“However, before we develop recommendations, it’s really important that we make sure we have a full and complete picture of the arrangements businesses use and the issues they encounter. So, we are publishing this interim report to ask people to confirm we have the right messages. We’re also setting out some of the questions we will be addressing over the coming months and would really welcome input on those as well.”

Some of the many complexities identified with the use of unapproved share schemes include:

  • Managing the schemes and the PAYE tax/NIC withholding rules for cross-border/international employee populations.
  • Problems valuing company shares for tax purposes.
  • The difficulties of completing HM Revenue & Customs reporting forms such as form 42.

This report is available on the following website:

If you operate employee shares schemes and need any guidance, please feel free to contact us on 01962 856 990 or


See also…

Finance Bill 2017 Update!

IR35 Tax System ‘Completely Unnecessary’

Autumn Statement 2016

2016 Budget Summary


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