Set up employee share schemes
Choose the best employee share scheme
The first step in choosing a suitable share scheme is to decide on your business objectives for introducing such a scheme.
Why introduce a share scheme?
You might want to introduce an employee share scheme to:
- attract new talent to work for your business
- offer an incentive to retain valuable staff across the business
- provide targeted incentives to selected employees
- conserve cash and reduce the cost of pay and/or bonuses
Employees can be given shares that are held in a trust, receive share options or purchase shares on attractive terms.
Other considerations when introducing a share scheme
When thinking about introducing a share scheme for your business you will also need to consider:
- costs - how much to spend on the share scheme plan
- staff eligibility - details of the share scheme plan, eg employee eligibility
- schemes changes or closes - what will happen if the share scheme needs to be wound up or if the tax incentives change
- regulatory requirements attached to the share scheme
- value your shares - how do you go about this
- tax reporting - HM Revenue & Customs (HMRC) reporting requirements if you plan to operate an approved share scheme
- choosing a suitable scheme - whether you prefer a HMRC approved share scheme, with the associated tax and National Insurance contribution benefits, or an unapproved taxed employee share scheme, which allows you flexibility of design
Share schemes: seek professional advice
It is worthwhile seeking expert financial advice from an accountant and/or solicitor before making a final decision on introducing an employee share scheme for your business.