Understanding Non-Tax-Advantaged (NTA) share option plans

What is an NTA share option plan?

An NTA share plan is a fully discretionary scheme, meaning companies have complete flexibility over conditions and restrictions. These can be tailored to individual participants and company needs.

Unlike structured tax-advantaged plans such as the Enterprise Management Incentive (EMI) or Company Share Option Plan (CSOP), NTA option plans do not follow a formal framework and provide greater adaptability.

Under an NTA option plan, participants receive the right to purchase shares at a fixed price in the future, subject to time-based, performance-based, or event-triggered conditions.

Benefits of an NTA share option plan

An NTA option plan provides several advantages:

• Complete flexibility – No restrictions on exercise price, option amounts, or holding periods.
• No eligibility criteria – Companies can grant options regardless of their corporate structure, trade, or participant status.
• Supplementing existing schemes – Useful for when other scheme thresholds are exceeded (for example EMI (£250,000 per employee) and CSOP (£60,000 per employee), acting as a top-up scheme.
• Accessible to non-employees – Can be utilised to reward consultants, advisors, or subsidiary employees.

Tax treatment of an NTA share option

When NTA options are granted to employees, the tax treatment differs from tax-advantaged schemes:

• Income tax and National Insurance Contributions (NIC) may be payable upon exercise, based on the difference between the market value at exercise and the option price.
• Any increase in share value post-exercise will be subject to Capital Gains Tax (CGT) upon sale.
• If shares are deemed ‘readily convertible assets’, tax is collected through PAYE, and NICs are required.
• Companies will typically prioritise tax-advantaged schemes first, as gains on exercise under these are taxed at lower CGT rates (18% for basic rate taxpayers, 24% for higher rate taxpayers).
• A corporation tax deduction may be available for the employer, equivalent to the gain at the point of exercise minus the price paid by the employee.

Speak with our share scheme specialists today

With extensive expertise in all types of share option plans, our specialists provide tailored advice to navigate complex incentive structures.

Our end-to-end service includes:

• Scheme design and documentation
• Option granting and HMRC registration
• Valuation of shares on exercise
• Compliance and ongoing reporting

We have helped numerous companies unlock growth potential through share schemes, leading to enhanced employee retention, performance improvements, successful exits, and tax savings.

If you’re considering an NTA share option plan, please do not hesitate to get in touch.

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