Employee share incentives

Employee share incentives allow a business owner to give equity ownership to individual employees or the entire workforce. The practical delivery of an employee share scheme can take various forms, and each has its own advantages and disadvantages. 

Why start an employee share incentive scheme?

Employee share schemes offer many advantages for business owners and their employees. Generally, the advantages include: 

  • Attracting and retaining the best talent in your industry/sector with truly tailored remuneration packages
  • Incentivise and motivate employees by giving them a stake in the company and reasons to maximise their performance
  • Tax advantages versus salary and bonus payments
  • Cashflow benefits. 

Employee share schemes: what do you need to consider?  

The details of an employee share scheme can be structured to suit the business and the objectives of the existing owner. Initially, it is important to consider some key questions: 

  • How much do you wish to dilute your existing equity? 
  • Will shares be offered immediately or in the future? 
  • Will those shares/ share options be dependent upon business and/or individual performance? 
  • What happens when shareholders leave the company? 
  • What is your exit strategy when you choose to sell your remaining shares? 

Based on these questions, business owners can start to look at options like Enterprise Management Incentive, Company Share Option Plans and Share Incentive Plans that are approved by HMRC. 

Creating and managing an employee share scheme is a complex process, particularly when we consider tax and legal issues.

Setting up an employee share scheme

Consilium Chartered Accountants work with businesses across Scotland to set up and manage their employee share schemes.

Our Tax specialists are experienced across a diverse range of industries and sectors, building tax-efficient share ownership schemes. We can manage every aspect of the scheme on your behalf; from the initial set-up to ensuring the scheme is compliant with HMRC. 

For a confidential discussion about employee share incentives please contact our Tax Partner, Craig Coyle

Learn more about Consilium’s expertise in share schemes, Tax planning and remuneration planning

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Craig Coyle
Tax Advisory
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0141 204 6650