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.

  • HMRC Employment Related Securities Helpline
    03000 322 7074