It has long been recognised that highly motivated employees are more productive and where a member of staff has a vested interest in the firm or organisation, they will often show higher productivity and performance levels.
One way of turning employees into stakeholders is the use of share schemes as a reward or incentive. Share schemes can provide tax benefits for both employee and employer, but equally, if not set up properly, these schemes can significant tax implication for both employee and employer. With a broad number options available, getting the right professional advice is important when considering the costs involved in setting up a scheme, administration and true value of the benefit to the employee.
Our dedicated tax team are on hand to guide you through the schemes available to you when looking to build attractive and efficient incentive schemes. By taking the time to understand what your objectives are, our advisers can create a scheme tailored to how you wish to manage your scheme and the employees you wish to benefit.
For example, if you are looking to create a companywide scheme with the aim of reaching all your employees, you might consider a Share Incentive Scheme (SIP) which provides a flexible and tax efficient option which can be made available to any member of staff. However, if you wish to use shares as an incentive or reward for senior executives or key employees, you might consider an Enterprise Management Incentive (EMI) share option scheme which can bring important tax benefits to both the employer and the employee. Alternatively, there are a range of other share option schemes or share bonus plans available and which you adviser can discuss with you. Choosing the right scheme is important, not all schemes benefit from tax treatment and we would always recommend taking professional advice before making any decisions regarding share incentive arrangements.