Share schemes and share incentives are employee benefits that can provide substantial reward and tax advantages to the employer and can be a way of motivating staff.
There are four types of HMRC-approved tax-advantaged share schemes, which have varying terms and conditions.
Some advantages of the schemes include paying no income tax and National Insurance on any increase in value of the shares, or not paying tax on any bonus at the end of the scheme. The qualifying schemes are:
- Share incentive plans
- Save As You Earn (SAYE)
- Company share option plans
- Enterprise management incentives (EMIs)
While there are other share schemes available, they will not offer the same tax advantages.
Advantages and pitfalls vary for each share scheme, so it is important to understand what the scheme involves, versus when you are liable to pay tax, and the general terms and conditions.
Here at Smith Cooper, we provide support to both employees and employers about all the available types of share schemes, offering reliable and commercially viable advice along the way. We can help you identify and implement the most appropriate tax-advantaged share scheme to suit your needs.
To avoid unwanted tax exposure, it is vital to take professional advice and to consider adopting an approved tax-efficient option plan, so please don’t hesitate to get in touch today.