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Why Consider an Employee Share Scheme?

Employee share schemes provide a range of benefits, including:

  • Enhanced Employee Motivation and Retention: By giving employees a share in the company’s success, share schemes help to increase engagement, loyalty, and productivity.
  • Succession Planning: Share schemes can facilitate the gradual transfer of ownership to employees, making them ideal for business owners planning to step back or retire.
  • Tax Efficiency: Depending on the scheme chosen, there are potential tax benefits for both employers and employees, making share schemes a financially savvy option.

Types of Employee Share Schemes

There are several types of employee share schemes, each with unique features and benefits. Our team can help you choose the best option for your business. Here are the most common forms of Employee Share Schemes:

  • Share Award SchemesIn these schemes, employees are awarded shares directly. Depending on whether the scheme is approved by HM Revenue & Customs (HMRC), the value of the shares may be subject to income tax and National Insurance contributions. Tax-advantaged schemes offer more favourable tax treatment but come with additional restrictions.
  • Share Option SchemesThese schemes give employees the right to purchase shares at a fixed price in the future. The price is set when the options are granted, allowing employees to benefit if the company’s share value increases. Options can be linked to performance goals, such as achieving sales targets adding an incentive element to the scheme, or can be linked to the Company being sold in the future to a third party (exit only).
  • Share Purchase SchemesEmployees can buy shares outright, save towards a share purchase, or make a small deposit and pay the balance later. These schemes can be flexible, allowing employees to gradually increase their ownership in the company.

HMRC-Approved Share Schemes

Approved share schemes offer tax and National Insurance advantages, making them an attractive option for both employers and employees. Two of the most popular HMRC-approved schemes are:

  • Company Share Option Plan (CSOP)Under a CSOP, employers can grant employees options on shares in the employer company or the employer’s parent company. There are statutory conditions to be met so it is important to take advice before granting any options. The share price is fixed on the grant date, and employees can exercise their options after a specified period. If the shares are sold at a profit, no income tax or National Insurance is due on the gains, provided certain conditions are met. The company may also benefit from corporation tax relief.
  • Enterprise Management Incentives (EMI) SchemeThe EMI scheme is particularly popular with private companies. It allows businesses to grant options over shares worth up to £250,000 per employee, with a total company limit of £3 million. EMI schemes are flexible, offering significant tax advantages, including potential reductions in Capital Gains Tax and income tax savings. There are various statutory requirements which must be met in order for a company qualify to grant EMI options so it is vital you take both legal and financial advice before exercising such a scheme.

Why Choose Lawson West Solicitors?

  • Specialist Expertise: Our solicitors have extensive experience in setting up and managing a wide range of employee share schemes, ensuring that your scheme is tailored to your business’s needs.
  • Tax-Efficient Solutions: We work closely with your financial advisors to maximise the tax benefits of your share scheme, both for the company and its employees.
  • Comprehensive Legal Support: From initial planning and legal structuring to ongoing management and compliance, we provide end-to-end legal support.
  • Customised Advice: We understand that every business is unique. Our advice is personalised to align with your specific business goals and circumstances.
  • Employment Advice: We also have a specialist employment law team as granting shares/share options is an appropriate time to revisit your employee’s employment contract to make sure it adequately protects your business; for example, it includes tailored and robust restrictions should your employee leave and checks notice periods are appropriate.

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Considering an employee share scheme for your business? Contact Lawson West Solicitors today for expert legal advice on the best options for your company.

Becki Beswick

How Can Lawson West Help You?

Starting and growing a business takes real dedication. Our knowledgeable Corporate Commercial team works seamlessly alongside business owners, directors, sole traders and entrepreneurs to realise their business ambitions.

From initial partnership or shareholder agreements to company acquisition or disposal, we support every transaction along the way. You can rely on our dependable experience of what not to do and likely obstacles along the way, to determine the best course of action. We know the pitfalls and delays that could jeopardise your aspirations and we have strong relationships with finance and accounting professionals to support your transaction or deal to achieve the best outcome.

Our dependable team has a talent for understanding your needs and we look forward to helping you.

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Expertise

Employee Ownership Trusts (EOTs)

Testimonials from Employee Share Schemes

Great client service is at the centre of our thinking, it’s embodied into how we train and develop our staff, how we help our clients and how we advise and assist people and business owners with their legal needs.

Our Core Values are Welcoming, Confident, Supportive, Knowledgeable and Dependable and we aim for clients to have a positive experience with Lawson West Solicitors.

Evidence of our great client service can be seen in the reviews and testimonials we regularly receive. We are always pleased to receive great reviews because it means our clients are happy with the service we provide, and it shows that we deliver on our core values, we don’t just talk about them. We really welcome client feedback and hope you enjoy reading some of the latest testimonials throughout this website.

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Vaishali Thakerar, Head of Employment, Lawson West Solicitors, Leicester ""I would just like to take this opportunity to thank you for all your help and support with this matter and will keep you in mind should I need any legal support in the future.""

R B, Client, Leicestershire

Being flexible about the time and meeting place. Understanding our needs.

Mr & Mrs C, Leicester, Leicestershire

Tactful and positive. A big thank you to all staff.

Mr P, Market Harborough, Leicestershire

Always available to answer my questions.

Mrs L, Leicester, Leicestershire

Excellent service with good advice and timely execution of process.

Mr & Mrs B, Market Harborough, Leicestershire

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