IFA Corporate Guide

Employee Perks

Competition for skills is getting hotter, so employers may well want to consider providing incentives to help attract and retain staff. Employee perks can range from private health cover to company cars, gym membership or even financial packages including death in service benefits for beneficiaries.

However an increasing number of businesses are realising the latest range of employee share option schemes include significant tax and national insurance cost advantages. In these employees can receive free shares, options to buy them at specified prices after a period of time or buy shares directly, sometimes matched with free ones. IFAs can have a highly valuable input here, assessing each plan’s pros and cons, and then handling the set–up and management so businesses find making a decision not just profitable but time effective too.

HM Revenue & Customs approved schemes are the ones with tax and National Insurance benefits. Taxed plans do not, but may have other aspects that make them more suitable for a particular firm.

Revenue approved plans include CSOP (Company Share Option Plans up to £30,000) and EMI (Enterprise Management Incentives up to £100,000 per individual) are for smaller, younger, higher–risk companies to help them keep selected employees with scarce skills willing to invest their time and expertise in helping such ventures achieve their potential.

SIPs (Share Incentive Plans) and Save as You Earn (SAYE) plans are tax efficient ways to reward all employees. SIPs involve the giving of free shares, buying partnership ones and receiving matching shares all held in a trust. SAYE schemes allow employees to save between £5 and £250 a month for up to seven years with a bonus on completing the plan.

An IFA can help employers find an incentive scheme that is suitable to their needs and fits within their budget. They will also crunch the numbers to identify the most cost–efficient means of providing such incentives, as well as advising businesses on any relevant tax breaks. They may settle on a combination, for example with an Enterprise Management Incentive scheme for directors and a Share Incentive Plan for other staff. They can also advise if the tax conditions change.

The value of the advice from an IFA or an employee benefits consultant in employee benefits and employee share option schemes can be extremely useful to a business.

Copyright © 2008 IFA Promotion Ltd.

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