Home Services Tax Employer solutions Employee share plans

Employee share plans

Keeping your employees motivated is key to business growth

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

Share plans are one of the most effective ways to reward, motivate and retain your employees. By giving employees the chance to acquire shares in your company, you can help create a sense of belonging and provide staff with an opportunity to share in future growth and value.

Whether you’re looking to boost engagement, support succession planning or attract and keep top talent, our specialists can help you design and implement a share plan that is both commercially robust and tax efficient.

Why choose a share scheme?

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

A company’s value is frequently influenced by the decisions and actions of its directors and senior management. 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.

A man sits at his desk, which is covered with flow charts. In one hand, he holds a pen, gesturing towards a flow chart, while his computer screen displays yet another flow chart.

Types of employee share plans

A share plan should be designed to align with the commercial objectives of your business. Whilst this must be the key priority, there are tax advantaged plans which, if appropriate, can be tax efficient ways to motivate employees.

There are four tax efficient statutory arrangements:

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

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

Equity based share plans are typically structured in one of two ways:

Shares (immediately issuing shares to employees)
Options (a right to buy shares in the future)

If an equity-based plan is not appropriate for your business, a ‘phantom share plan’ may also be worth considering.

What to think about before setting up a share plan

There are many things to consider before implementing a employee share plan, including:

What are you trying to achieve in the long term? It's important to make a share plan worth your while and worth your employees' while
Have you identified what type of share plan 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 a motivating share plan for employees? What outcomes might employees look for?
How will the employee realise value from the share plan?

How can we help you implement the right employee share plan?

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

Some of the services we offer include:

Helping you identify the type of share plan which will be the best solution for your company
Designing plan terms focused on your commercial needs
Providing tax advice in connection with your share plan
Carrying out a tax valuation of the shares to be used in the share plan
If CSOP or EMI are used, drafting the required documentation
Reviewing documentation prepared by your lawyers from a tax perspective
Helping with employee communication to maximise the incentive impact
Assisting with annual reporting and other compliance matters e.g. notification of EMI options to HMRC
Identifying and rectifying historical share plan issues
Assisting with the process of exercising share options