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Some companies have a share option policy which allows employees to take out company shares as a form of benefit.
A business might choose to introduce a share scheme to act as an incentive for potential employees to join the company or for current employees to stay with the company.Speak With A Specialist
An employee share scheme provides the employee with an opportunity to buy a share in the company they work for.
There are a number of different employee share schemes available, depending on the eligibility of the business and employee in question.
Examples of share schemes include:
Spencer Churchill Solicitors offer specialist advice regarding the different types of company share schemes.Get Started Today
A Save As You Earn (SAYE) scheme is a savings share scheme that allows you to purchase shares using savings.
At the end of a three to five year savings contract, you can use the savings to then buy shares.
The advantages of using this scheme mean that at the end of it, any interest or bonuses will be tax-free.
Capital Gains Tax might only apply if you sell the shares but if you transfer shares to an individual savings account (ISA) or a pension after the end of the scheme then you will not need to pay this.
A non-tax favoured share option plan permits, at the discretion of the company, a select number of employees to receive the option of acquiring shares.
This scheme is viewed as low-risk because there is no up-front cost or obligation for the individual in receipt of the offer to pay monies over.
An Enterprise Management Incentive (EMI) is a share scheme designed for small to medium scale businesses.
With the EMI scheme, companies can select employees who will be given the option to take shares over a certain amount of time, upon meeting specific criteria.
With a Company Share Option Plan (CSOP), employees have the option to purchase up to £30,000 worth of shares.
This CSOP scheme is suited to businesses that are not eligible for an EMI scheme and is advantageous as there are no Income Tax or National Insurance charges.
A CSOP scheme is designed to promote long-term commitment from employees who take part.
Share schemes can vary and can also be tailored to suit your specific requirements. To understand which share scheme is the right option for your business, it is important to ask the right questions:
Spencer Churchill Solicitors can offer specialist share scheme advice to make sure that you adopt the right scheme for your company.
A share scheme has criteria that it must follow, and must address certain important points such as:
It usually takes a certain period of time before an employee is eligible to take advantage of any share options and purchase shares. A three year period is standard.
A scheme should consider what happens in the event that an employee should leave the company and what is in place for redundancy leaves or leaves due to misconduct.Speak With An Expert
There are a number of benefits to setting up a company share scheme.
If employees own a share of the company, then they are more likely to stay with the company for the long-term. Replacing an employee can be a heavy burden – especially on start-up businesses.
Share schemes can help to retain employees and get them more involved in the company.
Share options can be a useful method of attracting potential employees and bringing new talent into the business.
Research has found that employees who own a share of the company they work for tend to work harder because they recognise their direct value to the company and feel more responsible for it.
Productive employees mean a higher output for the company and will boost the overall success of the business.
Share schemes can make employees feel more involved in the management of the business. For employees who feel like they have a say in the direction of the business and its success can boost satisfaction and employee contribution.
Share schemes can create a happier, more productive workforce that truly believe in the company’s mission. Overall, this will enhance company value significantly.
We are an experienced and dynamic law firm offering specialist share scheme advice to companies looking to retain or recruit employees.
Our specialists can talk you through any queries you may have about adopting a share scheme as well as tailor a service that suits you and your needs, in line with official legislation.
We offer expert advice on growth shares, share incentive plans, unapproved share option schemes, employee benefits and more.
Transparent, open and tailored advice is at the heart of what we do and we strive to help businesses achieve their goals.Speak With An Expert
Share schemes are set up for employees to have the opportunity to own a share of the company they work for.
This means that employees can have more of an investment in their place of work and in driving its success.
Shares involve owning a piece of the business but options can be used at some point in the future that can become shares at a later date or in the event of an exit.
Company share schemes are not free as shareholders are always subject to Capital Gains Tax but paying the top rate of this can be avoided.
Many share schemes, in particular EMI schemes, are very tax friendly.
The cost of launching a share scheme can range from £5,000 and beyond to set up. This figure will vary and there will be additional costs along the way.