Share Schemes

An employee share scheme is a powerful staff motivator. It can also be highly tax efficient and has the overall effect of increasing employee productivity and consequently overall business performance. 

By sharing the rewards of business success with employees, it can be a cost effective way to remunerate staff and build long term loyalty. In short, an employee share scheme can encourage employees to think like business owners and become more accountable and productive. 

There are a variety of share schemes available, each with their own qualifying criteria, benefits and aspects to consider. Employee gains arising on the sale of shares acquired through approved share schemes are typically treated as capital and taxed accordingly (at a top rate of 28%, compared with the top rate of income tax). In some cases they can provide tax free returns.

CP Tax can identify the best share scheme to suit your company’s circumstances and objectives; prepare company valuations and agree them with HMRC; put the scheme in place from start to finish; complete annual compliance paperwork; and then advise you and your staff on the most tax efficient ways in which to exercise the options.

Depending on the type of scheme in operation and other conditions such as the presence of an employee trust, exercising share options need not always involve a sale of the company, therefore share option schemes can be a strong employee motivator even when a business sale is not envisaged.