Employee share schemes: a guide for UK businesses

What is an employee share scheme?

An employee share scheme is a way of giving employees a stake in your company. It’s a popular and potentially tax effective way to attract, retain and motivate employees.

Because employee share schemes don’t need immediate cash payments (unlike salaries or cash bonuses), this can make them ideal for start-ups or when cash is tight.

Employee share scheme benefits include:

• Incentivising employees to perform better,

• Attracting and retaining key people, eg in start-ups with limited cash for high salaries,

• Enhancing remuneration packages tax efficiently,

• Helping with succession planning for major stakeholders, and

• Raising equity funding, particularly in management or employee buy-outs