Share incentive schemes: employee incentives
Share incentive schemes provide incentives for employees in three key ways:
Gift of shares
Gifted company shares are increasingly offered as employee incentives alongside pensions or health insurance. As an added bonus, if the shares are placed in trust through an approved Share Incentive Plan, the value is tax free after five years.
- For more information, see Chapters 3 and 4 of the Guide or check out the relevant fact sheets.
Share Options
A share option is the right, not obligation, to buy shares in the future at a value agreed today. The value of the share option increases if the value of the shares increases.
The employee benefits from this increase without having to pay upfront for the shares and there are significant tax advantages if a government scheme is used.
The available government schemes are the Enterprise Management Incentive and the Company Share Option Plan.
- For more information, see Chapter 6 of The Guide or check out the relevant fact sheets.
Share Purchase
There are a number of ways to offer share purchase as part of an employee incentive scheme. Share incentive plans include those that make it possible:
- To offer shares to employees at full value with later gains taxed at just 10 percent or less
- To establish a favourable employee savings scheme, such as an approved Savings Related Share Option Scheme, so that employees can save to buy shares
- For employees to pay an initial small amount for shares, through a deferred purchase plan, thereafter paying a small annual tax charge until the full value of the shares is paid.
You can view our Guide or order a copy here for more information about any of these share incentive plans, download our free fact sheets or contact us for further advice.
