Many employers give directors and employees the opportunity to acquire shares in their companies on advantageous terms. Their aim is to give a performance incentive through a chance to benefit from the future growth of the company and to encourage people to identify with the company. Often the benefits are lost if the employee leaves.
Employees are therefore more likely to be loyal to the company.
The Finance Act 2000 introduced two new schemes that benefit from significant tax advantages. They are likely to prove popular, reversing a recent trend against Inland Revenue approved schemes. They took effect on 28 July 2000. Click here for more details. Despite the advantages of giving employees an interest in the company, employers should consider all the issues carefully before introducing a share scheme.