What better way to reward your employees with this Christmas than a share scheme. An employee share scheme allows staff to have a stake in the company they work for. Not only can they boost performance and morale, they also offer some tax advantages.
Giving away shares in a company you have built can prove intimidating. That’s where Gravita can help you find your feet.
There are a couple schemes that you may be aware of:
- Enterprise Management Incentives (EMIs)
- Company Share Option Plan (CSOP)
You may be wondering which scheme would be most effective for you, so this guide outlines the different models.
Enterprise Management Incentives (EMIs)
If your company has assets of £30 million or less and fewer than 250 employees, it can offer employees Enterprise Management Incentives (EMIs) – the ultimate Christmas present in the form of share options.
To qualify as an employee for this, you need to work at least 25 hours a week (or 75% of your time) for the company, like a Christmas elf working hard behind the scenes.
The perks:
- EMIs give you share options up to the value of £250,000 in a three-year period
- No Income Tax or National Insurance if you buy the shares at market value (the price they were when you were granted the option).
If your employee gets a discount on those shares, they might owe some tax on the difference. If you buy the shares within 10 years of being offered them, you will not pay Income Tax or National Insurance on the difference.
So, this Christmas, your company could give you a share of its success, with EMIs as the ultimate holiday bonus.
Companies covered by HMRC’s ‘excluded activities’ are not allowed to offer EMIs.
Company Share Option Plan (CSOP)
A CSOP gives employees the option to buy up to £60,000 worth of shares from 6 April 2023 (or £30,000 if the options were granted before 6 April 2023).
If an employee buys shares between 3 and 10 years after being offered them, they will not pay Income Tax or National Insurance on the difference between what they paid for the shares and what they’re actually worth (Market Value). It’s like getting a Christmas bonus with no extra strings attached.
Summary Points:
There are a range of share schemes that offer a range different benefits with different conditions, and they are not limited to the two examples in this article. If you think a share scheme would be something that you have been considering, Gravita can review the scheme to ensure that you offer the scheme that fits you best.
If you are an employer already operating an EMI (Enterprise Investment Management) or non-tax advantaged share schemes, you must submit an ERS (Employment Related Securities) return every year for all schemes, including one-off awards or gifts of shares.
Transactions for each tax year should be included in the ERS return for that year which must be submitted by 6th July following the end of that tax year.
What should I do next?
Get in touch with us and bring some festive cheer to your employees this year!
