22nd May 2024

Employee Share Schemes: Motivate Your team and Supercharge Your Business

Nicole Third picture

Nicole Third

Tax Team Leader

Employee Share Schemes are a brilliant way to create financial empowerment within your business.

Each year, National Employee Share Scheme Day is celebrated on the 22nd of May. We thought we’d take this opportunity to share several share scheme benefits that all scaling business owners should know about.

Whether you’re an employer aiming to attract and keep top talent, or an employee keen to share in your company’s success, Share Scheme Day celebrates the value of shared ownership and financial empowerment.

What are employee share schemes?

Employee share schemes (ESS) are a great way to give your team members a stake in your business.

There are several HMRC-approved ESS plans, each with their own rules and tax implications. Common share schemes include: Share Incentive Plans (SIPs), Save As You Earn (SAYE), Company Share Option Plans (CSOP), and Enterprise Management Incentives (EMI).

Share options can be one of the most tax-advantageous benefits employers can offer. They align interests, boost morale, and drive growth. Surprisingly, they aren’t widely offered.

A recent survey by the Department for Work and Pensions revealed some shocking results: in the North East, only 1% of households have employment with a company offering a share scheme and we’d like that to change.

The benefits of Employee Share Schemes

But why should you look to offer employees a share scheme? Depending on the scheme offered there are tons of benefits and remember, share schemes aren’t just for big corporations—they can be a game-changer for businesses of all sizes!

Attract Top Talent

Finding the right people can be tough, especially in a competitive job market. Share schemes can make your job offers stand out.

Talented folks are always on the lookout for roles where they feel valued and have the opportunity for big rewards.

Offering share options can make your company an attractive choice for high-caliber candidates who are eager to invest in the company’s future.

Boost Employee Motivation

When employees have a stake in the company, they’re more likely to give their best.

Knowing that their hard work directly contributes to the value of their shares can drive them to go the extra mile.

It’s a win-win: they get potentially significant financial rewards, and you get a team that’s motivated to see the company thrive.

Improve Retention Rates

High employee turnover can be a headache. Share schemes can encourage employees to stick around longer since many of these plans have vesting periods—meaning employees need to stay with the company for a certain amount of time before they can cash in.

This helps build a loyal, stable team and reduces the costs and disruptions associated with hiring and training new staff.

Align Interests

When your employees own a piece of the company, their goals align more closely with yours.

They’ll care about the company’s long-term success because it directly affects their personal financial gain.

This alignment can lead to better decision-making and a stronger, more unified push towards common goals.

Cash Flow Friendly

Startups and growing businesses often have to watch their cash flow closely. Share schemes can be a smart way to reward employees without needing to fork out large sums of money right away.

Instead of big bonuses, you’re offering potential future gains, which can be just as attractive.

Tax Advantages

In the UK, certain share schemes come with tax benefits. For example, the Enterprise Management Incentive (EMI) scheme offers significant tax relief for both the company and the employees.

This means you can provide a valuable benefit without the hefty tax burden, making it a cost-effective way to boost compensation packages.

Foster a Positive Company Culture

Share schemes can create a sense of ownership and camaraderie among employees. When everyone has a stake in the success of the business, it can foster a collaborative and positive work environment.

This sense of shared purpose can be incredibly powerful in driving your company forward.

Ready to learn more about employee share schemes?

There are a number of different schemes that you can adopt, and you can really make them your own to give the most back to your workforce.

At Blu Sky, we have substantial experience of valuing and implementing share schemes with our clients. If you would like to have a chat to see what schemes is right for you, please get in touch for a free chat!