Tax Blog - 21 June

21/06/2024

New IRD guidance – Employee Share Schemes

IRD have recently published further guidance in relation to employee share schemes:

· QB 24/03: Fringe benefit tax – employee share loans and associates

· IS 24/04: Trustee of employee share scheme trust treated as nominee

An employee share scheme (ESS) is, broadly, an arrangement with a purpose/effect of issuing/transferring shares in a company to an employee in connection with the employee’s employment/service.

QB 24/03 considers whether the employee share loan exclusion from FBT can apply when an associate of the employee enters into a loan to acquire shares in connection with the employee’s employment. The QB concludes that a fringe benefit would not arise in this situation, provided that a fringe benefit would not arise if the employee were provided the loan to acquire the shares under the ESS in the same circumstances.

IS 24/04 considers the available subscribed capital, treasury stock and dividend implications of a trustee of an employee share scheme holding shares as nominee. This IS notes that, following changes to the ESS rules in 2018, IRD have received various questions about how the law applies in certain scenarios.

If you have questions about whether the ESS rules apply to you or an arrangement you are considering entering into, please get in touch with one of the team.

Polson Higgs Tax team.

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