Joint share ownership plans (JSOP)

Joint share ownership plans (JSOP)

A joint share ownership plan is an incentive plan that delivers capital gains tax (CGT) treatment for the growth in value of employee share awards above a set equity hurdle. They are very versatile and can be used to replace or supplement a range of other employee share plans.

How a joint share ownership plan works

The basic principle of a JSOP is that the employee and an employee benefit trust split the benefit of ownership of a shareholding between them. The trustee acquires the shares and is the legal owner of them, but the employee and trustee are joint beneficial owners of those shares. A co-ownership agreement records the basis of this joint beneficial ownership.

The co-ownership agreement specifies that the employee holds an interest in each share that represents a proportion of all of the share rights and consequently the employee will receive a proportion of the sale proceeds. The employee’s proportionate interest represents the value above a pre-set ‘hurdle’. The trustee holds the balance of the share rights. The hurdle is usually set by reference to the value of the shares at the award date – typically with some premium – so that the employee takes the growth in value.

The co-ownership agreement often divides the voting, dividend and other share rights between the joint owners.

The trustee has a call option to unwind the joint ownership of the shares at the end of the vesting period, so that the employee will be left with outright ownership of a proportion of the jointly owned shares with the trustee retaining the remainder. Further call options can be used to give effect to performance or employment conditions, so that the employee forfeits entitlement to a proportion of the jointly owned shares if the conditions are not met throughout the vesting period. This means that the JSOP can be used to support a wide range of commercial objectives.

When should you use a joint share ownership plan?

A joint share plan can be used as an alternative to a non-tax-advantaged share option plan (see example below). It can also be an alternative to a restricted share plan where funding an upfront acquisition of shares would be difficult for the employee and the upfront income tax cost of buying at a discount would be prohibitive. The idea of a JSOP is that the employee’s share interest has a low initial value because the employee has an upside only entitlement, so the upfront income tax cost is manageable.

Combining a conventional long-term incentive plan (LTIP) with a JSOP award to deliver the growth in value could be a tax-efficient way to enhance the LTIP. If the value is to be delivered under the JSOP, it may be possible to grant an option over the trustee’s interest in the shares which would “top up” the returns to the employee and overall give a blend of returns subject to income tax and capital gains tax.

Tax treatment of joint share ownership plans

In tax terms, a JSOP can be attractive as it is intended to produce a manageable upfront income tax and NIC charge when the employee acquires the share interest. If the employee were required to pay market value for the share interest (which should be relatively low), there would be no upfront income tax or NIC charge.

The upside delivered to the employee should be taxed as a capital gain at a rate of 20% and the annual exemption or other CGT reliefs could be available.

There is no employer corporation tax deduction for the growth in the value of the shares, but the employer’s NIC costs can be low in comparison to other plans.


The worked example below contrasts a non tax advantaged option plan with a JSOP and shows that an advantageous employee tax and NIC result can be achieved.

In this example, the starting share price is £2 and price at vesting is £8. The exercise price for the non tax advantaged option is set at the share price at grant (£2). 50,000 shares are subject to the option.

The tax value of the JSOP interest on the grant date is £10,000 (ie 10% of the whole share value). Under the JSOP, the employee is entitled to all value above the hurdle, which is set at £2 per share. When the non tax advantaged option is exercised at the end of the vesting period, all the shares are sold immediately.


Non tax advantaged share options

Joint share plan


Number of shares under award



Income tax and employee’s NIC on grant



Income tax and employee’s NIC on exercise/vest @47%



CGT on sale of shares @20% *



Total employee tax cost



New sale proceeds due to employee after funding exercise price and tax








Employer’s NIC @ 13.8%



Corporation tax relief @ 25% (on amounts subject to income tax and on employer’s NIC)



Net employer tax cost



* CGT figures include the annual exemption (£6,000 in 2023/24) but no other reliefs.

See our share incentives hub.

For help and advice on creating joint share plans to help your business grow, please contact Andy Goodman or Matthew Emms.