Employee Incentives – Frequent Issues

Employee share incentives can be a valuable tool in motivating, rewarding and retaining employees. They can also be tax efficient and in most cases, tailored to the clients' goals and objectives. However, navigating the structures and plans available can be challenging and at times perplexing! The table below gives examples of some of the most common issues faced by our clients together with the most likely types of plans available.

Client issue Response Most likely plan types We need to lock-in/motivate selected employees only Discretionary share plans allow the Board to determine who participates, when and how much should be awarded EMI, Employee Shareholder Scheme (ESS), Company Share Option Plans (CSOPs), Growth Shares, Nil/Part Paid Share Plans We're interested in tax efficient reward for our employees While other areas of remuneration planning have been targeted by recent legislation, Government initiatives have enhanced tax breaks on employee share incentives with the tax cost now capable of being often reduced to zero or no more than 10% EMI, ESS, Growth Shares, Nil/Part Paid Share Plans We want to offer all employees a stake in the company Direct all employee ownership can be delivered in a number of ways and through tax efficient share plans Indirect ownership offers a different model - allowing employees a say in the running of the business and an opportunity to share in the profits of the business, but no long term direct capital stake Share Incentive or SAYE Plans or all employee operation of EMI or Growth Shares. Indirect involvement can be created via an EBT or the Government's new Employee Ownership Trust structure (which allows CGT free sales into the EOT and income tax free profit...

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