Management incentives and share schemes

Grow your business and incentivise key members of your team with expert share schemes and advisory services

How do share schemes work?

Share schemes allow individuals to participate in a company’s equity. Depending on the size of the business and the industry in which it operates, certain tax-advantaged schemes may be available to help attract and retain key individuals. Such schemes are often used by private equity houses as a means of incentivising key management within their portfolio of companies, an area in which we have substantial experience.

Implemented successfully, these schemes can incentivise employees to stay long term and contribute to the growth of the business. Supported by our HR Consultancy and business & corporate tax teams, we have the expertise to advise on the most appropriate scheme for you and tailor it to your business’ specific needs.

Share schemes within the United Kingdom can generally be summarised as follows:

Share option plans

  • Enterprise Management Incentive (EMI): A government-backed scheme designed to help small and medium sized businesses attract and reward employees by offering tax-advantaged share options.
  • Save As You Earn (SAYE): Allows employees to save money over a set period and use the funds to purchase company shares at a discounted price.
  • Company Share Option Plan (CSOP): Permits companies to grant employees share options with tax advantages and purchase shares at a fixed price.
  • Unapproved Share Option Plans: Flexible share schemes, allowing companies to give employees options to buy shares without the need to meet strict HMRC criteria, offering greater adaptability, but without tax advantages.

Share plans

  • Growth shares: Given to employees or investors that only gain value once a company exceeds a certain performance threshold.
  • Share incentive plans: Allows employees to acquire shares in their company tax-efficiently, offering benefits such as free shares an partnership shares purchased through salary.
  • Nil paid and partly paid shares: Issued to employees or investors with only a portion of their value paid upfront.
  • Phantom share schemes: Employees receive cash rewards based on the value of the company’s shares, without actually owning them.

How to decide which share scheme you should implement

A formal valuation may be required depending on which scheme is being implemented. In some cases, such as the issuing of EMI options, the actual market value and unrestricted market value will need to be agreed upon with HMRC within a certain time frame.

In the case of share plans such as the issuing of growth shares, we always recommend an independent valuation. This helps ensure that the hurdles and values are aligned with management’s requirements and obligations.

Why use Moore Kingston Smith for your management incentives and share schemes?

Our expert valuations team at Moore Kingston Smith are highly skilled in advising on and valuing share schemes and management incentives. Get in touch to see how our business valuation team can help you.

Paul McKeown brings an impressive track record and over three decades of experience as the firm’s Head of Valuations. His experience and expertise cover all aspects of valuations, and he specialises in navigating complex business and share structures for commercial, accounting, regulatory, litigation and tax purposes. Throughout his career, Paul has provided invaluable advice on… Read more

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