Employee share incentives can be a valuable tool in motivating, rewarding and retaining employees. They can also be tax efficient, with gains in a SIP being tax exempt and other gains being liable to capital gains tax. But it is a complex area and an expected consequence can be liabilities to income tax and national insurance contributions.
There are four types of tax favoured scheme:
- Enterprise Management Incentives (EMI)
- Company Share Ownership Plan (CSOP)
- Save as You Earn (SAYE) option scheme
- Share Incentive Plan (SIP)
Whilst unapproved option schemes can be unattractive, giving rise to income tax and, potentially, national insurance contributions, close companies should consider the issue of nil or partly paid shares to incentivise directors.
For further information, please contact Jacquelyn Kimber or Andrew Jones or download our fact sheets below.