Accounts must show share option national insurance burden, says standards-setter

The move follows the introduction of an NI charge on UK employers for gains made by employees when exercising options issued under some unapproved schemes. Introduced by the Social Security Act 1998, the charge applies to options granted after 5 April 1999.

The gain on which NI contributions are payable is the difference between the share price at the date the options are exercised and the exercise price paid by the employee. A charge is also payable on share option gains arising under the new all-employee share option scheme announced in the recent Budget.

The taskforce reached a consensus that provision should be made for NI on outstanding share options, calculated at the NI rate applied to the difference between the market value of the underlying shares at the balance sheet date and the option exercise price.

An information sheet including the draft has been sent to finance directors of listed companies and recipients of the ASB’s bulletin.

Comments are invited by 5 June.

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