How to create a share scheme that attracts and motivates key staff, tax-efficiently

  • Share schemes have benefits for both businesses and employees, and there’s a range to choose from.
  • It’s important to have specialist advice, as some schemes have stringent tax restrictions.
  • We can design and implement a share scheme that’s attractive and achieves your objectives tax-efficiently.

Share option schemes are becoming increasingly popular with companies as a way to incentivise employees. Essentially, a share option is the right to buy a certain number of shares in the company at some point in the future, but at their current price.

They are attractive for both the company and the employee. The scheme encourages the employee to perform well, because if the company’s shares increase in value, their shares will go up too. Potentially, they could make more money than if they were simply paid a higher salary.

The company benefits from more a motivated employee, and because there’s usually a set period before they can exercise their options (i.e. buy their shares), the employee is committed to staying longer at the company. It also means the company isn’t committed to paying the employee higher wages, which is good for cashflow , especially if the company is going through a difficult period financially.

There’s a range of different share option schemes available. Some have tax advantages which can be very attractive, although they may also have fairly stringent restrictions put in place by HMRC. The variety of schemes, and their pros and cons, mean you definitely need specialist advice before choosing one.

If you’re considering a share option scheme, talk to us. You’ll benefit from our wide experience in designing and implementing schemes, and our expertise across corporate, tax, employment and HR areas. We’ll discuss your situation and what’s most important to you, so we can advise on:

  • which schemes are available to you
  • which are the most beneficial tax-wise, for you and your employees
  • which will best achieve your commercial and strategic objectives.

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