The changes follow a year-long review by the OTS on how to create a simpler, fairer tax system for share plans that do not qualify for tax advantages.
The OTS said it hoped the changes proposed would simplify the process, increase fairness and encourage employers to offer ownership options without creating avoidance opportunities.
Recommendations include the creation of an employee shareholding vehicle to better manage employee share arrangements, simpler valuation of shares and administrative simplification.
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It also recommends companies align the tax of international assignees with the tax on other general earnings and create a "marketable" security where employees are given the option of whether to pay tax on acquisition or when the security can be sold for cash.
Joe Whiting, tax director for the OTS, said: "The current share schemes tax legislation is a tangle of complexity. It creates costs and pitfalls for companies and employees, and significant burdens for HMRC.
"We have spent a lot of time talking to the people that use the schemes, and found that whilst employers saw real benefits of offering share-based rewards, they had difficulties with managing the schemes within the tax rules. At the same time we have been very mindful of avoidance risks in this area."

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