Sharing goes beyond caring when accounting for employee share schemes

The benefits of Employee Share Schemes are both financial and motivational. They enable staff to benefit from the success of the business they're helping to create. Additionally, they are a popular means of attracting employees, especially when the company is unable to pay high salaries. So they might be particularly relevant for your business now, given the current economic climate and/or the maturity of your business.

The tax advantages of company share schemes can be appealing for employees and businesses alike. Some offer income tax and national insurance contribution advantages that can help reduce a company's employment costs. Others may help your business conserve cash, with less demands for higher salaries if a business offers a share plan.

For employees, Employee Share Schemes allow them to have a direct stake in the company they work for, offering additional financial rewards beyond their salaries. The company may provide incentives, in the shape of shares, to meet key business and financial targets. And as the company becomes successful, the value of the company's shares will likely increase too. So employees in the scheme will stand to benefit financially, with many schemes offering tax-benefits as well.

Beyond financial gains, Employee Share Schemes often attract a higher-calibre of staff, retaining and motivating them too, with a better alignment of shareholder and employee interests.

Equally so, for succession planning. By helping to navigate a transition in leadership while maintaining continuity within their workforce, ownership of a business can be gradually transferred to its employees who have been in receipt of shares and who have built and remained loyal to the business benefiting, rather than to new outside shareholders.

Depending on the size of your business and your goals for the future, there are a number of options to choose from among the HMRC approved, tax advantageous, employee share schemes. Each have their own mechanics, tax benefits, varying levels of employee option, commitment or none. From Enterprise Management Incentives (EMI) share options to Company Share Option Plans (CSOPs), from Save As You Earn (SAYE), or savings-related share options schemes to Share Incentive Plans (SIPs).

In short, Employee Share Schemes are a strong motivational tool for employees to work for the company's long-term success - employees may be less likely to leave if they have a financial stake in the company. Nevertheless, companies must carefully consider the potential pitfalls and implement appropriate safeguards to mitigate risks and maximise the benefits for all involved.

GSM has the experience to identify the Employee Share Scheme to best suit your company and employee's circumstances. We can help you prepare for and agree your Employee Share Scheme with HMRC, put the scheme in place in the most tax efficient manner, prepare an annual compliance report, as well as advise you and your staff on the most tax efficient ways in which to exercise options.

Employee Share Schemes can be an integral part of your tax planning and longer term strategy for growth and compelling in being able to attract, incentivise and retain the personnel who can make a difference to your business and your bottom line, as well as their own. To hear more contact GSM on 020 7935 3793