Sharesave Schemes (Oct 2010) |
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Rewarding Success and Encouraging Stakeholders
It is possible for employers to design their own employee share schemes however most prefer to make use of the favourable tax treatment available through the four Her Majesty’s Revenue and Customers (HMRC) approved schemes: sharesave (SAYE), share incentive plan (Sip), company share option plan (Csop) and enterprise management incentive (EMI). The most popular staff option scheme in the UK is the sharesave scheme, also known as save as you earn (SAYE). Executive share option plans, including long term incentives (Ltips) are used for very senior employees.
More than 12,000 organisations operated employee share schemes during the 2008 -2009 tax year, according to figures from HMRC. Although the schemes in use include some from each of the approved schemes as mentioned above, by far the greatest number are enterprise management incentives (EMIs). The take-up for EMI’s has risen to 10,050 organisations from the 9,110 which took advantage of the scheme in 2007-2008.
Malcolm Hurlston, chairman of the Employee Share Ownership (Esop) Centre, said: “If, as the coalition hopes, entrepreneurs are to provide the impetus for growth as we move out of the recession, then EMI’s will play an important role in attracting the required talent to SMEs”.
Although tax incentives are being reviewed, we feel the EMI scheme will continue to operate. The costs of the schemes are self-regulating: when the economy stutters or dips the value of the share options, and therefore the relative cost to the taxpayer, falls. Conversely, when the economy picks up the extra revenue provided by fast-growing SME’s means that the schemes pay their own way.
Why Operate a Share Scheme?
Organisations running such schemes have experienced very positive effects on employee motivation and high productivity. They are not just about the financial incentive however, although of course higher profits are to everyone’s benefit. They are also about generating a more involved and participating workforce. Share schemes can have a significant effect on company loyalty and as employees are key to a company’s success they can be instrumental in propelling companies forward.
Contact Employee Benefits at Cartlidge Morland to find out how an employee share scheme can help your organisation.
Cartlidge Morland is an independent employee benefits consultancy. We provide benefit services to a wide range of partnerships, family companies, PLCs, charities and governmental organisations. We also provide financial advice to private clients, investment management and mortgage broking services
Phone us on 020 7709 5560 or complete the online contact form
