Employee share schemes rise in popularity

More than 12,000 organisations operated employee share schemes during the 2008-09 tax year, according to figures from Her Majesty’s Revenue and Customs (HMRC).

The schemes in use include save as you earn (SAYE) sharesave plans, share incentive plans (Sips), company share option plans and employee management incentives (EMIs).

Take-up for EMIs has risen to 10,050 organisations from the 9,110 took advantage of the scheme in 2007-08.

However, the number of organisations that issued EMI options to key employees fell from 2,840 in 2007-08 to 2,550 in 2008-09.

The number of employees who received EMI options fell from 26,500 to 22,000 during the same year, while the initial value of the shares over which they had options fell from £310 million to £210 milion.

Malcolm Hurlston, chairman of the Employee Share Ownership (Esop) Centre, said: “If, as the coalition hopes, entrepreneurs are to provide the impetus for growth as we move out of the recession, then EMIs will play an important role in attracting the required talent to SMEs.

“Although tax incentives are being reviewed, EMI is certain to be safe. The cost of the scheme is in a way self-regulating, as when the economy stutters the value of the share options and therefore the relative cost to the taxpayer falls.

“Conversely, when the economy picks up the extra revenue provided by fast-growing SMEs means that the scheme pays its own way.”

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