Solutions

These popular “approved”� schemes enable employees to be granted share options with a favoured tax treatment.  The growth in the value of the shares between grant and exercise is subject to capital gains tax at a maximum of 28%, rather than the normal combined income tax and national insurance rate of up to 52%. 

The EMI (Enterprise Management Incentive) scheme is particularly generous as up to �120,000 worth of options can be granted to each employee.  The scheme is, however, limited to companies meeting certain size criteria.  Larger companies may use the CSOP scheme which has similar benefits but limits options to �30,000 per employee. 

A key benefit of both schemes is the ability to choose which employees may participate and to build in individual performance criteria governing the exercise of options.  This feature means that these schemes are particularly suited for rewarding key management.  The schemes are often administered through an EBT.