Employee share incentives

Many companies consider providing shares or share options to key employees to help achieve corporate goals – such as profit growth; a sale of the business or even a flotation of the company’s shares on the stock market. When cash is tight, the use of share incentives can form a crucial part of an employee’s remuneration package and may be used to help recruit, retain and motivate key employees.

There is plenty of research to verify the extra motivation that can be achieved when the interests of owners and employees are aligned to produce increased employee retention and greater employee engagement. The Government continues to support employee participation and there are a number of tax efficient schemes that can be used to deliver shares to employees – be that a discretionary Enterprise Management Incentives (EMI) scheme or Company Share Option Plan (CSOP), through to all employee arrangements such as the Share Incentive Plan (SIP) or Save As You Earn scheme (SAYE).

We work closely with clients to understand the short and long term objectives of the Board and its shareholders, to provide a tailored approach which will allow shares to be awarded, or options granted, to employees in as tax efficient manner as possible, with such arrangements clearly communicated to participants to ensure maximum appreciation.

We have considerable experience in dealing with employee share incentives, and can assist in the design and implementation, operation, and ongoing HMRC compliance of the following share incentive arrangements:

• Enterprise Management Incentives (EMI) share option schemes;
• Company Share Option Plans (CSOPs);
• Unapproved share option plans;
• Share Incentive Plans and Save As You Earn Schemes;
• Employee Ownership Trusts;
• Growth Share plans;
• Long Term Incentive Plans; and
• Phantom Share Option plans.

Agreeing share valuations with HMRC when using an approved scheme is vital in understanding the tax implications. We can assist with ad-hoc share valuation projects for tax purposes and regularly undertake independent share scheme reviews (particularly on due diligence exercises) to ensure ongoing compliance and no unexpected PAYE or NIC liabilities.