Employee share schemes
There are a number of government approved share schemes which offer certain tax advantages to employees. The approved schemes are: Share Incentive Plans (SIP), Save As You Earn (SAYE) schemes, Company Share Option Plans (CSOP) and Enterprise Management Incentive (EMI) schemes.
The schemes are designed to help incentivise employees by giving them the opportunity to invest in the business they work for. This in turn helps businesses retain and recruit key staff and offer tax efficient benefits to deserving staff.
The use of employee share plans does not have an inherent financial risk for employees as they are under no obligation to exercise an option to purchase shares if the price is below the exercise price. However, there are other risks such as the shares loosing value if the profitability of the business decreases or the expectation that employees should take a lower salary in exchange for share options.
Some employers offer employee share schemes which are not approved by the Government. The purchase of shares in unapproved share schemes are subject to the usual tax rules.
HMRC have recently published updated forms for share scheme returns for the year ending 5 April 2014. In addition, from 6 April 2014 all existing and new employee share schemes and arrangements must be registered online. Employers must also self-certify that any tax advantaged schemes meet certain requirements. From April 2015, all information returns will need to be filed online.