Employee Share Schemes
We can all agree that what makes most businesses successful is their people. However, as we know 2021 is a challenging time on many levels but particularly on the people front.
With a reduction in the overall available employee pool due to Brexit and COVID, to mention just two reasons, it is even more important than usual to attract and retain the best people.
One way of doing this is to give your employees the opportunity to hold a stake in the business. Whilst employees can be given shares outright either by way of a gift or purchase of shares, this can be expensive and tax inefficient for the individuals concerned.
In view of this HM Revenue and Customs have created several approved employee share schemes. Of these an Enterprise Management Incentive scheme (EMI) and a Company Share Option Plan (CSOP) are suitable for rewarding individual (mainly senior) employees, whilst there are two other schemes, a Share Incentive Plan (SIP) and Save As You Earn schemes (SAYE) which are designed to enable all employees to benefit.
As you would imagine, all these schemes come with their own rules and conditions, and it may well be that one scheme is more suitable for your situation and employees.
Why Use HURST?
At HURST we regularly assist clients in implementing employee share scheme. We therefore have a vast amount of experience dealing with many different scenarios and companies of all shapes and sizes. We can use this experience to help you implement a scheme that works for you, your business and importantly for your people.
We can help by
- Understanding exactly what you are trying to achieve with your incentivisation plans.
- Making suggestions about which share scheme would achieve your objectives.
- Designing the scheme and explaining it to prospective recipients.
- Preparing a valuation of the business to assist with discussions.
- Where necessary submitting and agreeing option prices with HMRC.
- Reviewing legal documents and making necessary returns to HMRC.
By giving your employees the potential to own shares in the business, you are giving them a stake in the future which will help in retaining them, particularly if you are on a journey which will lead to an eventual sale.
For certain employees, giving them the opportunity to have a stake in the business can be an important factor in motivating and retaining them. It can also differentiate you from the competition.