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About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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Employee Benefits Live Share Plans as part of the SME remuneration strategy
September 2014
About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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Why establish a share plan?
► Recruit – differentiate against competitors for talent ► Retain – lock in staff ► Incentivise – take the company to the next stage(s) of development and
participate in the benefits ► Part of the short and long term variable pay/reward strategy ► Are share plans popular?
► 10,160 companies operating tax qualified share plans (HMRC Employee Share Schemes Statistics for 2012 – 13)
► Many others operate non tax qualified plans
September 30, 2014 Employee Benefits Live Page 1
About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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What are the main plans out there?
► Tax qualified ► EMI – enterprise management incentive options
► CSOP – company share option plan ► SAYE – save as you earn share options ► SIP – share incentive plan
► ESS – employee shareholder shares (receive free shares in exchange for giving up certain employment rights) ► Entrepreneurs relief (10% CGT rate for those qualifying)
► Not tax qualified but tax efficient ► JSOP – joint share ownership plan
► Growth share plans – new class of shares
► Not tax efficient ► Unapproved share options ► Share awards – right to receive free shares
September 30, 2014 Employee Benefits Live Page 2
About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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Typical attributes of SME plans
► Discretionary – need to pick and choose participants and the level of participation ► Therefore SAYE and SIP (all employee arrangements) are often eliminated
► Tax efficient ► Therefore EMI, provided company qualifies ► ESS ► Entrepreneurs relief for certain shareholders ► If not EMI qualified – JSOP, growth shares
► Simple to implement, administer and maintain? ► Options plans (including unapproved and EMI) ► ESS ► JSOP and growth shares – complex ► Entrepreneurs relief – can be complex
September 30, 2014 Employee Benefits Live Page 3
About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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Overview of typical tax position of select plans
Award Exercise/vest Sale Corporate tax deduction
EMI Nothing is exercise price equal to market value
Nothing is exercise price equal to market value
Capital gains tax – 10% if shares sold more than 12 months after grant of option
Gain on exercise deductible
ESS Income tax (up to 45% on value between £2k and £50k
Nothing Zero Initial award value deductible
JSOP/growth shares Undervalue taxed as income (up to 45%)
Nothing Capital gains (28%) on growth in value from award
Initial (small) value deductible. No deduction for growth element
Unapproved options Nothing Income tax (up to 45%)
Capital gains (28%) on growth in value from exercise
Gain on exercise deductible
September 30, 2014 Employee Benefits Live Page 4
About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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Making the most of your share plan
► Share plans cost something – ensure you know the cost and are happy with it ► Make the most of your share plan
► Communicate – at award ► Communicate during the vesting period – how is the value moving; what is the value of
the award? ► Communicate on vesting / realisation
September 30, 2014 Employee Benefits Live Page 5
About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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Share Plans as part of the SME remuneration strategy
Questions?
September 30, 2014 Employee Benefits Live Page 6
About color themes Choose the appropriate design theme for your presentation. The first two options on the design tab are correct EY themes, these two are the only ones that should be used. (1) dark backgrounds for onscreen; (2) light backgrounds for handouts.
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Thank you Employee Benefits Live Share Plans as part of the SME remuneration strategy
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