Company share schemes

27.04.2022
Christina Futter
Tax
Business stock image

As an employer, there are various ways to remunerate your team. Increasing salary may be enough to retain some staff whilst others want a ‘slice of the action’. Company share schemes are an increasingly common way to incentivise employees, and there are various different ways to achieve this, depending on your requirements, and theirs.

Business stock image

An Enterprise Management Incentive (EMI) scheme is a tax advantaged share scheme and is becoming an increasingly common mechanism of giving shares to employees for small and medium-sized companies, particularly for those in the technology sector.

As this scheme attracts tax advantages there are various EMI share scheme rules that mean not every company nor employee are eligible.

We can help you explore other different share scheme options, for example an unapproved (non-tax advantaged) arrangement, or, flowering shares and growth shares, both of which also involve the employee receiving shares in their employer company but work in a different way to EMI.

Flowering shares carry restricted rights (for example voting/dividend rights) until a hurdle has been set. As the employee meets this hurdle(s), restrictions are lifted and their shares carry more value.

Growth shares are similar in that the employee will only be able to benefit from the value of the shares over a certain threshold – this leaves any value within this threshold to first be allocated to the original shareholders.

Each type of share scheme has it’s own positives and negatives and we can help you navigate the most appropriate scheme for you and your company be based on what you want to achieve. We can also advise on the tax implications for each type of share scheme.

In some cases, a simple bonus scheme is the best route however this can only be determined once a conversation has been had around intentions and possibilities.

For more information about company share schemes

Wide-ranging tax planning and compliance services for individuals seeking advice and guidance from our team of experienced and highly qualified professionals.

Friendly and coherent advice and guidance on accounting and tax matters for small business owners including those starting out for the first time.

Established businesses requiring accounting and tax compliance services, forward thinking tax planning advice and the support to help your business succeed.

Our full range of enhanced corporate services aimed at large companies and those requiring audit, assurance, corporate tax advisory and diverse tax planning services.

Glossary

Test

This is a test definition

more