Other Schemes

Alongside more familiar arrangements such as EMI or CSOPs, companies sometimes use a wider range of share-based incentives. These include unapproved options, growth shares, LTIPs and phantom shares, as well as:

• Joint Share Ownership Plans (JSOPs) – Here, an employee and a trust jointly acquire shares, with the employee mainly benefiting from the shares' future growth in value. Useful where traditional options may not be suitable. Capital gains tax will apply to any gains and there would be a low initial income tax charge.

• Restricted Shares – This is when actual shares are issued to employees. The ability to benefit from the share ownership will be restricted initially but these restrictions will often lift after a period of time. Gains in value will be subject to capital gains tax but not income tax or National Insurance if the holder agrees to pay income tax upfront on the shares’ full value (i.e. disregarding any value reduction caused by the restrictions) when they are first acquired.

• Share Purchase Schemes (also known as a Stock Purchase Plan) – Employees buy shares directly, sometimes as nil paid (deferred payment) or partly paid, allowing ownership without a large upfront cost. Flexible structuring can suit the company’s needs. Gains in value will be subject to capital gains tax.

Each of these schemes offers a different way to align employees with the company’s success. Choosing the right structure will depend on commercial goals, tax implications and what best motivates your team.

If you’d like to explore which scheme could work best for your business, get in touch with our team for a free initial consultation.