Businesses looking to keep key staff but unable to give them pay
increases due to the recession should take a look at a Government
scheme, according to Warwickshire law firm Lodders.
Kim Beddows, a solicitor in Lodders' business team, said
Enterprise Management Incentives (EMI) provided a way of keeping
and recruiting key staff.
"EMIs are share options with tax advantages. They are designed
to help small, higher risk companies recruit and retain employees
who have the skills to help them grow and success.
"They are also a way of rewarding employees for taking a risk by
investing their time and skills to help companies achieve their
potential," she said.
The tax advantaged share options with a market value of up to
£120,000 may be granted to a qualifying employee in a
qualifying company, up to a total share value of £3 million
under EMI options to all employees.
The shares must be in an independent trading company that has
gross assets of no more than £30 million.
Miss Beddows said: "The grant of the option is tax-free and
there will normally be no tax or National Insurance contributions
for the employee to pay when the option is exercised. There will
normally be no National Insurance contributions charge for the
employer.
"EMIs are a great way of recruiting and retaining key staff, and
are especially useful during a downturn when lack of profitability
may mean that you cannot give pay increases.
"What they effectively mean is that when the business is doing
better then the employees with EMI options will also do better and
find a great reward in the business success they have helped
create."
But she stressed that the qualifying rules were extremely
complex and that companies should not attempt to enter into the
granting of EMI options without first taking professional advice
from advisers experienced in this area.
"EMIs are useful tools but before putting a scheme in place you
should ensure that you have thought through why you are doing this
and exactly who should be included in the scheme," she said.
For more information about Lodders, please visit their website
here: www.lodders.co.uk