Employee share schemes just got slightly less scary

The way that employee share schemes (ESSs) are taxed has changed, so if you've been thinking about putting an ESS in place or issuing shares or options under an existing ESS, now might be the time to do it.

A few of the (relatively) more exciting changes:

1. Deferred tax. The time at which options are taxed has been deferred to when they are exercised(iewhen the employee receives the value) rather than the time they "vest" or become exercisable. The maximum period of deferral has also been extended to 15 years (from 7). This is a major improvement –basically, qualifying employees won't get a tax bill now until they're actually in the money.
2. Small start-ups. Further tax concessions will be available to employees of "small" start-ups who receive ESS interests which meet certain conditions. In this case, "small" means: