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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

Stock options for employees in the UK

Equity incentives are an invaluable way to attract, motivate, and retain top talent for your business. But when you cross hiring borders, they can become deeply complex.

Remote enables you to easily offer non-qualified stock options (NSOs) to your team members in the UK. There are no compliance headaches or administrative hassles — just simplicity and clarity for you and your people at every step.

What are NSOs?

NSOs are a type of equity incentive. They give your team members the right to buy a set number of shares in your company at a fixed price, known as the exercise price.

This typically happens after a vesting period, which is often based on the length of time your team member stays at your company. As a result, they are a great way to foster long-term commitment, and align people with your company’s strategic goals.

Who can receive NSOs in the UK?

Direct employees EOR employees Contractors
Can receive NSOs? Yes Yes Yes
Difficulty score Hard Hard Easy

It’s important to note that granting stock options to contractors can also potentially increase your misclassification risk in the UK (although this is not the primary factor). See how Remote protects you against misclassification.

How are NSOs taxed in the UK?

In the UK, NSOs are taxed in the following ways:

Direct employees EOR employees Contractors
At grant There is no taxation at grant. There is no taxation at grant. There is no taxation at grant.
At exercise For EMI and CSOP: There is no taxation, unless the exercise price is lower than the actual market value of the shares at grant (and as long as no disqualifying events occurred). For non-EMI/CSOP: The spread (i.e. the difference between the fair market value of the shares and the exercise price) is taxed as salary income. The spread (i.e. the difference between the fair market value of the shares and the exercise price) is taxed as salary income. The spread (i.e. the difference between the fair market value of the shares and the exercise price) is taxed as salary income.
At sale Any gain is subject to capital gains tax (CGT). Note that there is a CGT annual exemption. Any gain is taxed as capital gains. The tax treatment will differ depending on whether an s431 election has been made at the time of exercise. Any gain is subject to capital gains tax (CGT). Note that there is a CGT annual exemption.

Are there tax advantages for your team members?

Direct employees EOR employees Contractors
Several local tax-favored schemes are available, depending on your company’s maturity stage: EMI (Enterprise Management Incentives) in earlier stage companies. CSOP (Company Share Option Plans) for later stage companies. ‍ EMI and CSOP are subject to several conditions, including the maximum number of employees, the equity amount, working time, etc. ‍ Note that tax-favored schemes require the adoption of a sub-plan to the main equity incentives plan. No tax-favored scheme is available. However, you can allow your team members to exercise their non-vested stock options early (a process known as “early exercise”). This can potentially reduce their tax liability, although early exercises can be difficult to manage and may require additional paperwork. No tax-favored scheme is available. However, you can allow your team members to exercise their non-vested stock options early (a process known as “early exercise”). This can potentially reduce their tax liability, although early exercises can be difficult to manage and may require additional paperwork.

Is your business eligible?

If you want to use Remote Equity Advanced to offer stock options to your UK-based team members, your top corporation (i.e., your parent company) must be incorporated in Delaware. Your company must also be private — not publicly listed.