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Employee share schemes: What are they and what are the benefits?

30th May 2024

Employee share schemes are a powerful tool for awarding equity to your employees, offering a strategic way to incentivise and retain key staff crucial to your business’s success. These schemes not only motivate employees but also help engage the next generation of business leaders at a higher level within your company. In this article, Emily Smith, an assistant manager in our Corporate Tax team, shares more about the benefits of employee share schemes

What are employee share schemes?

Employee share schemes allow employees to acquire shares or options to buy shares in the company they work for. These schemes are designed to align the interests of employees with those of the business, fostering a sense of ownership and incentivising performance. By offering equity, companies can attract, retain, and motivate key talent, contributing to long-term business success.

Employee share schemes come in various forms, each with unique benefits and conditions. Options include:

There are also a number of other schemes that are generally for listed companies, including Save as You Earn (SAYE) and Share incentive Plans (SIP).

The benefits of employee share schemes

Employee share schemes offer a number of benefits, including:

Employee share schemes can be tailored to fit the specific needs and goals of your business, whether you want to reward a select group of key personnel or extend the benefits to your entire workforce.

Compliance and support

Awarding any shares or options to employees necessitates an Employment Related Securities (ERS) return to be submitted to HMRC by 5 July each year.

How We Can Help

We can guide you through selecting the most suitable employee share scheme for your business, facilitating its setup, coordinating with legal advisors, and effectively communicating the impact to your team. We can also assist you with your 2023/24 ERS return and ensure compliance.

For personalised advice on tax-efficient methods to incentivise your employees, please speak to a member of our Tax Team. We’re here to help you maximize the potential of employee share schemes for the benefit of your business and your team.


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