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Technical updates - Published 18th August 2014

Tax Connect – Share Incentives Toolbox

As the economy recovers there is an increasing expectation, particularly in the technological sectors, that to attract and retain the best staff you need to offer share incentives. Tax advantaged share plans work well by providing tax-efficient ways for individual employees to acquire and dispose of shares.

For most companies, the first item in the toolkit should be the Enterprise Management Incentive (EMI) plan. EMI options give employees the single most tax advantaged form of remuneration and, if structured correctly, can result in a tax charge as low as 10%.

Unfortunately, there are a number of qualifying criteria for EMI plans, which a company or a specific employee may not meet. The most common problems are where gross assets exceed £30 million, companies have more than 250 full-time-equivalent employees and where employees do not work sufficient hours at the company or group to be eligible for EMI. The good news is that if EMI is not possible, there are a number of alternatives.

Read the extended tax update here.

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