Income tax and NICs are largely but not entirely aligned in the UK tax and social security system. Employee share schemes is one area where this alignment does not always apply, particularly for private companies where there is no ready market for the sale of shares and the shares are not “readily convertible assets” as defined in the tax legislation.

The Office of Tax Simplification (OTS) has now announced that it is to undertake a study into the closer alignment of the two systems – see NIC Alignment – which may result in recommendations affecting the tax treatment of share schemes.