Employee Share Schemes

Unlock the Benefits of Employee Share Schemes with Specialist Legal Support

Implementing an employee share scheme is a strategic way to give your employees a stake in your business, fostering motivation, loyalty, and long-term commitment. Lawson West Solicitors offers expert legal advice to work with you and your financial advisors to design and implement the right share scheme for your business. Whether you aim to reward current employees, attract new talent, or plan for a future management buy-out, our team is here to guide you through every step of the process.

Why Consider an Employee Share Scheme?

Employee share schemes provide a range of benefits, including:

• Enhanced Employee Motivation and Retention: By giving employees a share in the company’s success, share schemes help to increase engagement, loyalty, and productivity.

• Succession Planning: Share schemes can facilitate the gradual transfer of ownership to employees, making them ideal for business owners planning to step back or retire.

• Tax Efficiency: Depending on the scheme chosen, there are potential tax benefits for both employers and employees, making share schemes a financially savvy option.

Types of Employee Share Schemes

There are several types of employee share schemes, each with unique features and benefits. Our team can help you choose the best option for your business. Here are the most common forms of Employee Share Schemes:

• Share Award Schemes

  In these schemes, employees are awarded shares directly. Depending on whether the scheme is approved by HM Revenue & Customs (HMRC), the value of the shares may be subject to income tax and National Insurance contributions. Tax-advantaged schemes offer more favourable tax treatment but come with additional restrictions.

• Share Option Schemes

  These schemes give employees the right to purchase shares at a fixed price in the future. The price is set when the options are granted, allowing employees to benefit if the company’s share value increases. Options can be linked to performance goals, such as achieving sales targets adding an incentive element to the scheme, or can be linked to the Company being sold in the future to a third party (exit only).

• Share Purchase Schemes

  Employees can buy shares outright, save towards a share purchase, or make a small deposit and pay the balance later. These schemes can be flexible, allowing employees to gradually increase their ownership in the company.

 

HMRC-Approved Share Schemes

Approved share schemes offer tax and National Insurance advantages, making them an attractive option for both employers and employees. Two of the most popular HMRC-approved schemes are:

• Company Share Option Plan (CSOP)

  Under a CSOP, employers can grant employees options on shares in the employer company or the employer’s parent company. There are statutory conditions to be met so it is important to take advice before granting any options. The share price is fixed on the grant date, and employees can exercise their options after a specified period. If the shares are sold at a profit, no income tax or National Insurance is due on the gains, provided certain conditions are met. The company may also benefit from corporation tax relief.

• Enterprise Management Incentives (EMI) Scheme

  The EMI scheme is particularly popular with private companies. It allows businesses to grant options over shares worth up to £250,000 per employee, with a total company limit of £3 million. EMI schemes are flexible, offering significant tax advantages, including potential reductions in Capital Gains Tax and income tax savings. There are various statutory requirements which must be met in order for a company qualify to grant EMI options so it is vital you take both legal and financial advice before exercising such a scheme.

Why Choose Lawson West Solicitors?

• Specialist Expertise: Our solicitors have extensive experience in setting up and managing a wide range of employee share schemes, ensuring that your scheme is tailored to your business’s needs.

• Tax-Efficient Solutions: We work closely with your financial advisors to maximise the tax benefits of your share scheme, both for the company and its employees.

• Comprehensive Legal Support: From initial planning and legal structuring to ongoing management and compliance, we provide end-to-end legal support.

• Customised Advice: We understand that every business is unique. Our advice is personalised to align with your specific business goals and circumstances.

• Employment Advice: We also have a specialist employment law team as granting shares/share options is an appropriate time to revisit your employee’s employment contract to make sure it adequately protects your business; for example, it includes tailored and robust restrictions should your employee leave and checks notice periods are appropriate.

Contact Us

Considering an employee share scheme for your business? Contact Lawson West Solicitors today for expert legal advice on the best options for your company.