Employee share schemes, which are used by companies to grant options to buy shares or award shares directly to their employees, can be a key part of an employer’s reward and retention strategy. With the on-going “war for talent”, share schemes, which can have tax advantages to both employers and employees, should be viewed as part of the on-going plan to ensure a business retains and motivates its key talent.

HMRC have recently published, on the 15 September 2017 updated data about the take-up and operation of company share option schemes, which provides a useful snapshot of the share option landscape as it stood in 2015-2016, (which is the most recent year HMRC have statistics for).

The data shows the widespread use of such schemes as well as the benefits that can flow from those schemes. Businesses who have not considered if such schemes may be appropriate are in danger of missing out and losing talent to rivals who have such schemes in place.

Key findings from the HMRC report include:
• 10,720 companies operated tax-advantaged share schemes. This shows that share schemes are not just for the FTSE 100 but can be used by many other businesses including those in the SME sector. We have seen the breadth of use of such schemes and have assisted clients from start-ups to large established employers across all sectors in putting in place share option schemes;

• The value of gains on exercised EMI (Enterprise Management Incentive) options has increased by 85% since 2013. In our experience. EMI schemes are a very popular form of scheme used by employers and as this figure shows, they do provide employers the opportunity to deliver real value to employees; and

• The estimated cost of providing income tax and National Insurance Contribution relief for the tax advantaged share schemes (including EMI) is around £880 million. This represents a significant tax saving for eligible employers and employees alike.

We work closely with clients and their accountants to identify what they are looking to achieve from a share scheme, identifying the best scheme to meet those needs and to put in place the arrangements to deliver the benefits of the scheme to the employer and employee.

For more information about share schemes and how they can benefit your business and your employees please contact Teri Hunter on T: 01628 4700004 or E: teri.hunter@moorcrofts.com.