Our predictions for employee ownership in 2019

In time honoured tradition, we hereby stick out our necks and make five bold predictions for what might happen in our world of employee share ownership in 2019.

1. Employee Ownership Trusts (“EOT”) will graduate from niche to mainstream, five years after their introduction in the Finance Act of 2014. Thanks to the publicity generated by high profile adopters such as Aardman Animations, many more medium sized companies will embrace this neat succession solution. EOTs will start to take off in the traditional professional services sectors such as law firms. The traditional partnership pyramid structure is on its last legs.
2. The big advisory firms will wade in to the EOT sector. Advisers who have been slow to spot the potential of EOTs will start to promote the concept to their clients as if they invented it. If the big firms do wade in, we hope they don’t spoil the structure by stretching what is possible for their greedier tax-avoiding clients, as they have done to nearly every other employee share scheme in the past. Sorry if I sound cross about that.
3. The number of companies offering Enterprise Management Incentive (“EMI”) share option schemes will top 10,000 for the first time. This extraordinarily versatile share scheme will become ubiquitous in any firm with ambition, thanks to its flexibility and awesome tax-efficiency. It will also be operated on a broader basis to benefit larger numbers of employees. Millennials want respect, and that means equity!
4. HMRC fines for late share scheme returns in the reporting period ending April 2019 will exceed £5 million. In keeping with its “shoot first, ask questions later” policy, HMRC will continue its muscular approach to errant companies. If they go too far, HMRC’s aggressive stance might start to deter some companies from adopting share schemes in the first place. On the other hand, if those companies appointed competent administrators, they have nothing to fear. Hint, hint.
5. Technology will disrupt the share scheme advisory market, but the role of experts remains secure. New low-cost platforms for creating and managing share schemes are useful tools, but the dream of unchaperoned self-service by clients seems far-fetched, in the same way that health apps are freely available to diagnose illnesses, but the GP and health professional are still consulted as much as ever.

If you would like further information check our fact sheets on the EOT and EMI, email us at enquiries@rm2.co.uk, or give us a call on 0208 949 5522 to discuss any of your share scheme or employee ownership requirements. We look forward to helping you in 2019.