Employee Share Schemes

Unlock the Power of Employee Share Schemes with David Craddock Consultancy

Are you looking to motivate your workforce, boost performance, and drive business success? David Craddock Consultancy Services specialises in designing tax-efficient, legally compliant, and high-impact employee share schemes tailored to your business needs.

Employee ownership allows employees to have a stake in the company, fostering a sense of ownership, increasing motivation, and aligning their interests with the long-term success of the business.

With a proven track record of delivering innovative solutions for both quoted and unquoted companies, David Craddock helps businesses:

✔️ Maximise employee engagement through bespoke share incentive plans.

✔️ Optimise tax efficiency while ensuring legal compliance.

✔️ Restructure share capital for business growth and succession planning.

✔️ Implement and manage schemes effectively for long-term success.

Our strategic approach ensures that your employee share schemes not only comply with regulations but also deliver tangible results, fostering a culture of ownership and commitment.

Considering a succession plan or management buyout? We can help structure your scheme, which is linked to an employee share trust, to facilitate tax-efficient share sales under the capital gains tax regime.

📞  Get in touch today to explore how we can transform your business through the proper tax-efficient share schemes!

What Are Employee Share Schemes?

Want to inspire loyalty, motivation, and long-term success in your workforce? Employee share plans give employees the chance to own a piece of the business they help grow, creating a stronger sense of commitment and shared success.

But with so many options, how do you choose the proper tax-efficient share schemes?

Approved vs. Unapproved Schemes

Some share schemes come with tax advantages under HMRC rules, while others offer more flexibility.

Approved Share Schemes are those that meet the conditions set out by HMRC, offering tax advantages to both employees and employers. These schemes are typically more structured and involve regulatory compliance to ensure the tax benefits are granted. Examples include the Enterprise Management Incentive (EMI) and Save As You Earn (SAYE) schemes.

Unapproved Schemes, on the other hand, are more flexible and do not qualify for the tax reliefs available to approved schemes. However, they allow businesses to design share schemes tailored to their specific needs without the strict requirements set by HMRC. While employees may face higher tax liabilities on shares awarded through unapproved schemes, they can be an excellent option when flexibility is paramount.

Benefits of Approved Schemes:

✔️ Tax Advantages: Employees often benefit from tax-free gains or capital gains tax (CGT) relief. For example, EMI allows the employee to pay tax on shares at a lower rate and potentially avoid Income Tax at the time of grant.

✔️ Attracting & Retaining Talent: Approved schemes, such as SIP, create strong incentives for employees to stay long-term as they benefit from the growth of the business.

✔️ Boosting Employee Engagement: Employees with ownership stakes are more motivated, aligned with the company’s goals, and invested in its success.

Eligibility Criteria for Approved Schemes:

✔️ Companies must meet certain size and structure conditions, with restrictions on the value of shares that can be offered under EMI, for example.

✔️ Employees must be working for the company at least 25 hours per week and have a qualifying role.

✔️ Company restrictions may limit shareholding percentages for certain schemes (e.g., SIP, SAYE).

Tax Implications for Approved Schemes:

✔️ Capital Gains Tax Relief: Under EMI, shares can qualify for CGT relief, allowing employees to sell shares and pay less tax.

✔️ Income Tax & NICs: Employees in schemes like SAYE may not face Income Tax or NICs if the options are exercised after a specific holding period.

Small Business?

The Enterprise Management Incentive (EMI) scheme is a top choice, offering tax benefits while allowing business owners to decide who participates and when.

Larger Business?

A SAYE (Save As You Earn) or SIP (Share Incentive Plan) ensures all employees have access to ownership opportunities, fostering a culture of collaboration and reward.

📞  Contact Us for Personalised Advice.

Having The Correct Share Incentive Plans Can Help:

✔️ Improve employee retention & productivity
✔️ Provide valuable tax benefits
✔️ Align employees with business growth

Not sure which scheme suits your business best?

📞 Let’s find the perfect fit for you. Get in touch today to explore the best employee share plan for your business!

 

Below is a list of reasons why companies and their advisers should consider introducing an employee ownership arrangement.

Please note that none of these reasons are mutually exclusive. The company can choose to operate an employee share plan for all, or any combination, of these reasons

 

To provide a basis for employee motivation and incentive.

To enable the company to meet its recruitment requirements.

To act as a retention tool for quality employees.

To expand the basis on which employees are rewarded for their work.

To encourage consensus between shareholders, management and employees.

To enable employees to think like shareholders.

To encourage interest in the business from within the workforce.

To assist in succession planning where a proprietor is planning to retire.

To facilitate a management buy-out.

To secure tax efficiencies for the purchase or sale of shares.

 

Below is a list of reasons why companies and their advisers should consider the introduction of an employee share trust arrangement.

Please note that none of these reasons are mutually exclusive of each other. The company can choose to operate an employee share trust for all, or any combination of these reasons.

 

To create a market for the shares in the absence of a recognised stock exchange.

To support the operation of employee share scheme arrangements.

To avoid dilution by recycling existing shares for employee share schemes.

To secure the capital gains tax treatment on the sale of the shares.

To enable shareholders to diversify their investment portfolio.

To hedge on the purchase of shares when share prices are low.

To warehouse shares in a secure and safe environment.

To budget for the cost of share purchases for employee share schemes.

To cap the initial outlay required to fund phantom liabilities.

To support long-term incentive arrangements.

To create a market for subsidiary company shares.

To facilitate a management buy-out.

To assist in succession planning where a proprietor is planning to retire.

To buy-out dissident shareholders.

To enable outside investors to withdraw their investment.

To enable the personal representative of an estate to dispose of shares.

To allow flexibility in share pricing for sales.

To operate a share market offshore with a view to achieving tax efficiencies.

To operate a share scheme as part of a pension arrangement.

To give employees security that their scheme shares are ring-fenced for employees

Frequently Asked Questions About Share Schemes

  1. Q: Are share schemes only for large companies?
    A: No, share schemes can be tailored to suit businesses of all sizes, from startups to multinational corporations.
  2. Q: How do share schemes affect company control?
    A: While employees gain ownership, the impact on company control can be managed through careful scheme design and implementation.
  3. Q: What are the tax benefits of share schemes?
    A: Many share schemes offer tax advantages, such as reduced income tax or capital gains tax for employees and potential corporation tax relief for employers.

📞  Contact Us for Personalised Advice.