Employee Shareholder Shares (ESS)
At SMH Accounting & Business Advisory, we offer a range of services to help businesses implement Employee Shareholder Shares (ESS) and other share incentive schemes to reward and retain key employees.
What are Employee Shareholder Shares?
Employee Shareholder Shares (ESS) is a type of share incentive scheme in which an employee receives shares in their employer’s company in exchange for giving up some of their employment rights. Introduced by the UK Government in 2013, ESS provides employees with a financial stake in the company they work for.
How does ESS work?
Under ESS, an employee is given shares in their employer’s company in exchange for giving up some of their employment rights, such as the right to claim unfair dismissal and the right to request flexible working. The shares must have a minimum value of £2,000.
The employee must sign a written agreement with the employer to confirm that they understand the employment rights they are giving up and the value of the shares they are receiving. The employer must also provide the employee with an independent legal advice on the terms of the agreement.
Taxation of ESS
There are tax advantages to ESS. The first £100,000 of gains made on ESS shares are free from Capital Gains Tax (CGT). There are also income tax advantages, as the first £2,000 of shares received by an employee under ESS is free from income tax and national insurance contributions.
Additionally, the employer can claim a corporation tax deduction on the cost of the shares issued to the employee.
At Sutton McGrath Hartley, we can advise you on the tax implications of ESS and help you to maximise the tax benefits available.
Why choose SMH Group?
Our team of experienced tax advisers can provide you with expert advice on ESS and other share incentive schemes. We can guide you through the implementation process, ensuring that your scheme is compliant with current legislation and maximises the tax benefits available.
Our services include:
- Advising on the tax implications of ESS
- Providing guidance on the implementation of ESS
- Preparing and submitting the necessary tax returns
- Providing ongoing support and advice on the management of your share incentive scheme
If you are considering implementing an ESS scheme or would like more information on share incentive schemes, contact the SMH Accounting & Business Advisory team on info@smh.group or 01142 664 432.
