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Employee share schemes can be a highly effective way of employers attracting, and retaining, key staff as well as aligning the employees and companies’ interests.
Another benefit of employee share schemes is that the government actually likes them and therefore provide tax relief for companies and their employees who use them.
However, as is the case with most tax benefits, there are stringent conditions that need to be met to ensure the relief is available.
There are a number of different schemes and the requirement for each scheme is different.
For SME clients we find that the most common employee share scheme is the Enterprise Management Incentive Scheme.
However, there are other schemes available where the conditions for MEI are not met, such as CSOP, SIP, SAYE.
There is also an unapproved scheme, such as growth share plans, long term incentive plans and unapproved share option schemes. As you can imagine, the unapproved share schemes do not qualify for most of the tax reliefs. But they can still be useful in aligning employee and employer interests and provide a real incentive for employees, especially where an exit on management buyout are possibilities in the short-medium term.
At ETC Tax we provide employee share scheme advice and have experience in dealing with all the approved and unapproved schemes.
When working with a client we seek to understand the employer’s strategic objective for creating the scheme. It may be employee attraction, retention or boosting remuneration packages or even succession planning for major shareholders or even raising equity funding.
We offer support by structuring, drafting and implementing share scheme plans and aligning client’s corporate objective. We advise on the tax implications for all parties, we cover the corporation tax, Income tax, NIC and CGT aspects.
We are also experienced in dealing with the international aspect of such arrangements. Ensuring that employee and employer are compliant in all relevant jurisdictions.
Whatever the reason for considering an employee share scheme we can advise on the most suitable option based on the client’s needs.