A share scheme by Christmas?
If you think it is too soon to be thinking about Christmas then think again! Here at RM2 we have already been inundated by restaurants touting their staff Christmas party offerings.
This is also a time of year when many companies who have been pondering an employee share scheme begin to realise that it is already getting late to have this in place by the end of the year. Yet, with living standards under increasing pressure, the importance of retaining and motivating members of staff has probably never been greater. So why delay further?
Beat the squeeze
This may be a good time to restate the advantages of employee share schemes. Against a background of high income tax and NIC rates, share schemes offer benefits that are potentially subject to Capital Gains Tax (CGT) only (or in some cases no tax at all!) Share schemes can be utilised by private companies as well as those with quoted shares. In private companies, employees can cash in their benefit on a trade sale or flotation. Alternatively, the company can provide an internal market through a vehicle such as an Employee Benefit Trust (EBT) (notwithstanding recent legislation limiting the operation of some trusts). Also, in tough times the value of quoted shares may be quite conservative; and HMRC is often willing to agree very low values for shares in private companies. In both cases this can lead to higher benefits for participants in share schemes since they acquire shares at a low price which will hopefully be worth considerably more at a later date.
Not only that. Share schemes help companies to keep cash in the bank, by providing alternatives to traditional cash bonuses. The cash flow cost of implementing an appropriate share option plan is modest, certainly when compared to the cost (real in terms of recruitment and training costs and also the lost opportunity cost in terms of downtime) of having to replace just one key individual. The cash, tax and NI savings are striking advantages of such plans and the Enterprise Management Incentives (EMIs) is particularly flexible and attractive. It is essential to ensure that employees buy-in psychologically too and therefore we also provide appropriate employee communications advice.
In short, you need to keep your key people on board and keep enough cash in the bank. A well designed and effectively communicated share option plan can achieve this.
How many share scheme days to Xmas?
The reason for highlighting this to you this month is that there is usually a flurry of demand for our share scheme services at this time of year. Many companies have been considering a scheme for some time but have previously pushed it down the agenda for consideration later. By the time they are ready to go ahead, they have to take their place with the other urgent client work, and it may be too late to establish the scheme before the end of the year.
By acting now, companies should be able to offer some pre-Christmas cheer to their staff, a better prospect by far than a churn of disgruntled employees looking for better rewards in the cold light of the New Year. Recruitment companies are well aware that employees feeling the squeeze are more likely to be looking around and we are currently seeing activity levels in the recruitment sector rising strongly.
So don't delay! Call us today on 020 8949 5522 to discuss your requirements. And at the same time, it might not be too early to think about booking your Christmas office lunch...