I've been providing employee share schemes since the early 80's, when the first tax-advantaged executive share option schemes were introduced. I worked with David Pett, acknowledged as the country's leading share schemes lawyer and the author of the textbook on the subject. Employee share schemes remain highly tax-efficient ways to incentivise employees and provide them with value linked to performance. Most attractive of all is the Enterprise Management Incentive (EMI) scheme, available to most private and AIM companies with fewer than 250 full-time employees.
EMI share schemes have a negative effective tax rate and the power to provide strong incentives to key employees without spending any precious cash. Private company owners are often concerned about diluting their equity and losing control of shares, but EMI options can be made exercisable only when the company is sold.
The current economic situation is particularly favourable to employee share incentives because share values are low. The tax benefits of the scheme generally apply to the growth in value after the scheme is implemented, so it pays to grant options while values are at a low point. In some cases low valuations allow shares to be given entirely tax-free. You need to look out for the employment-related securities rules, though - they can tax the growth in value of shares.
The 2012 Budget increased the individual limit to £250,000 (value of options when granted) and introduced the prospect of entrepreneurs' rellief (10% effective tax rate) if the shares are held for a year. There has never been a better time to implement a scheme.
of detail can be found at HMRC
share schemes. Better still, give me a call.