Klubb plc, a client of your firm, requires advice on the establishment of an approved tax-efficient share scheme

Klubb plc:
– Is a UK resident trading company.
– Intends to establish an approved tax-efficient share plan.

Approved tax-efficient share plan:
– The plan will be either an approved share incentive plan (SIP) or an approved company share option plan (CSOP).
– If a SIP, the shares would be held within the plan for five years.
– If a SIP, members will not be permitted to reinvest dividends in order to purchase further shares.
– If a CSOP, the options would be exercised within five years of being granted.
– In both cases it can be assumed that the plan members would sell the shares immediately after acquiring them.

Klubb plc wants the share plan to be flexible in terms of:
– The employees who can be included in the plan.
– The number or value of shares which can be acquired by each plan member.

Required:
(b) Compare and contrast an approved share incentive plan with an approved company share option plan in relation to:
– the flexibility desired by Klubb plc regarding the employees included in the plan and the number or value of shares which can be acquired by each plan member; and
– the income tax and capital gains tax implications of acquiring and selling the shares under each plan. (9 marks)