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Share schemes

Investment is often crucial for new business growth

Helping you implement and manage effective share schemes to help retain your employees

Share options are a popular choice for incentivising employees. They allow an option holder to purchase shares at a point in the future for a price set today. This means no up-front costs and no risk to the employee, as they do not have to buy the shares if the value has fallen.

There are four tax efficient statutory arrangements:

EMI (enterprise management incentives)
CSOP (company share option plan)
SIP (share incentive plan)
SAYE (save as you earn)

Share schemes that do not fall within any of the above are referred to as ‘unapproved’ or ‘non-tax advantaged’ schemes.

There are several ways to structure your share scheme, including:

Shares options – a right to buy shares in the future
Phantom shares – a variation on a long-term cash-based bonus arrangement, with payments directly linked to share value)

Why choose a share scheme?

Share schemes can be a powerful tool for recruiting, rewarding and retaining employees. If structured correctly, share schemes can provide employees with the opportunity to make substantial gains on shares, often in a highly tax efficient manner.

There is often a direct link between the actions of directors and senior management and the value of your company. Giving the management team a stake in your company can help motivate them to grow the business, aligning their interests with those of the shareholders.

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What to think about before setting up a share scheme

A share scheme should meet the commercial objectives of your business. Whilst this must be the key priority, there are tax advantaged schemes which, if appropriate, can be tax efficient ways to motivate employees.

Things to consider before implementing a share scheme:

What are you trying to achieve in the long term?
Have you identified what type of share scheme will be the best fit for your business?
What will be the impact of offering shares to your employees?
Which employees/directors will participate and will more join in the future? What is your basis for this selection?
How can the selected employees help the company grow in value or achieve the company’s targets?
What does ‘good’ look like for the company/the individual? What is motivating for employees? What outcomes might employees look for?
How will the employee realise value from the share scheme?

How do we help you implement the right share plan?

Our team of share scheme specialists have decades of combined experience and can help guide you through the process of implementing a share scheme in your business.

Some of the services we offer include:

Helping you identify the type of share scheme which will be the best solution for your company
Designing scheme terms focused on your commercial needs
Carrying out a tax valuation of the shares to be used in the share scheme
If CSOP, EMI or non-tax advantaged options are used, drafting the required documentation
Reviewing documentation prepared by your lawyers from a tax perspective