Sharing success

When considering what you have in your arsenal to attract and retain a skilled workforce a share offering can, on occasion, be the most effective solution.

The share offering can fall into two distinct categories, those which are approved by HMRC and those which are not, the latter generally not attracting tax reliefs whilst benefiting from the greatest flexibility.

Before providing employees with shares, the following points should be given consideration.

  1. Who should be involved?
  2. How will the award be determined e.g. by length of service, position or salary?
  3. Do you want to link the company objectives to the acquisition of shares or indeed revisit company objectives in light of the share issue?
  4. Should a new share class be issued in order to place restrictions on the rights of the new shareholder e.g. voting rights on certain company matters?
  5. Will financial assistance be provided e.g. will you lend the employee money to acquire the shares?
  6. What are the tax and implementation costs to both employer and employee?
  7. What would you like to happen to the shares when an employee leaves the company e.g. how will the acquisition of their shares be financed and who can buy them?
  8. Are all current shareholders in agreement?
  9. Are there any trade association restrictions on share transactions?
  10. Liaise with the bank, it is always worth keeping them informed.

Once you have decided to progress with an employee share scheme or share issue, make sure legal advice is sought and that you speak with our financial planning team regarding shareholder protection insurance in particular.

Communication is absolutely critical to a successful implementation of a share scheme/issue. This applies equally to those who have been identified as being part of the offering and those that have not. Individuals can react differently to a share offer, for some it can throw them, believing that it is part of a transition they do not wish to be party to. Knowing your staff is vital!

Should you wish to discuss any of the above in more detail, please do contact the AG tax team.

 

Get started today

Contact us today and speak to our expert team to get started

Contact
close slider