How to determine which share scheme is best for an organisation

According to June 2025 research by HM Revenue and Customs (HMRC), the number of employers operating tax-advantaged employee share schemes in 2024 was 20,370, a 2% increase from 2023, suggesting that interest in share schemes is growing. 

Offering a share scheme can boost engagement, enable staff to share in their organisation’s success, and act as an attractive element of a reward package. There are a variety of HMRC-approved share schemes employers can introduce for their employees. These include share incentive plans (Sips), save-as-you-earn (SAYE) or sharesave schemes, company share option plans (Csops), enterprise management incentives (EMIs), and long-term incentive plans (L-tips). 

Benefits, requirements and restrictions

Through Sips, employees can buy discounted shares, which are held in trust for three to five years. The options available include partnership shares, which are bought by the individual, and matching shares, where employers can match up to two for one on purchased shares. Employees can buy up to £1,800 pounds worth and there is no tax or national insurance to pay on free or matching shares. 

Employers can award up to £3,600 in free shares in the Sip annually per employee, subject to potential forfeiture if they leave within three years and performance-based criteria.

While both Sips and sharesave schemes have to be offered to all employees, there are some differences between them, explains Jonathan Watts-Lay, director at Wealth at Work. 

“With [sharesave] schemes, staff save up to £500 of their salary each month for three or five years,” he says. “If, at the end, the share price is higher than the option price, they can exercise the option. If the share price is below, they can get their money back. Any gains are subject to capital gains tax (CGT). As CGT has now been reduced down to £3,000 a year, more employees make gains above the threshold.” 

L-tips are normally shares granted for executives or managers and are awarded at specific milestones, such as staying at the organisation for three years, or increasing share price or profit. Once exercised, the options are treated as income, so staff will be taxed on these.

EMI schemes and Csops, meanwhile, see employees granted shares over an agreed period with no tax on award or sale, says Ifty Nasir, chief executive officer and founder of Vestd. 

“EMI eligibility requirements were expanded so more organisations can join,” he explains. ”From 6 April, it is a maximum employee headcount of 500, doubled from 250, total gross assets not exceeding £120 million, up from £30 million, and the option value limit rising to £6 million, up from £3 million. Csops aren’t limited by headcount, but there is a maximum value limit per recipient at £60,000. The shares can lapse if staff leave.”

Share plans can build a positive culture, with a personal stake in an organisation acting as a motivation tool for employees to stay and contribute to long-term success, says Dom Harrison, director of business development at Equiniti

“They can also build financial resilience for those who participate, increase productivity and improve workforce engagement,” he explains. ”Employees may take a more active interest in the organisation’s performance and future direction.” 

Determining the best scheme

When introducing a share scheme, employers should ask what they want to achieve through it, such as boosting engagement, retaining talent, or driving performance. 

Schemes can be set with specific conditions. Organisations that want to improve financial resilience or increase employee engagement could provide a Sip or sharesave scheme. These both require payroll integrations and could be used for overseas employees without some of the tax advantages.

Meanwhile, L-tips can help with long-term retention and link performance-based rewards directly to outcomes. For lower income workers, Sips with a matching element could boost accessibility, says Harrison. 

“Selecting the best scheme is matching the organisation’s goals, workforce and jurisdictional profiles, and constraints with each plan’s design characteristics,” he says. ”Employers should evaluate who their audience is, operational constraints, and what motivates their people, such as savings, ownership or performance-based rewards. They should also evaluate the costs of running it and providing shares at maturity and vesting.” 

Not every scheme will be suitable for every organisation, because some may be under the minimum number of employees or have too many assets. 

“EMI eligibility has now expanded, making it great for start-ups, scale-ups and enterprises,” says Nasir. ”If an organisation isn’t eligible due to the number of employees, Csops are the next best thing, with no limitations on organisation sizes.”

Watts-Lay adds that larger employers are more likely to choose Sip, sharesave and L-tips, with some offering both Sips and sharesave schemes. 

“Employers should also ensure that at scheme maturities, they are clear as to what the tax implications are for employees after exercising options and selling shares, as there will be CGT,” he says. 

Saving during difficult economic times

Due to the ongoing cost-of-living crisis, some employees may struggle to save money through a share scheme. Employers can support by highlighting the flexibility of some schemes and that employees can withdraw savings or sell shares if circumstances change. 

In tough economic times, organisations could also get creative to encourage employees to redirect disposable spending towards a share plan, explains Harrison. 

“They can create incentives such as swapping a weekly takeaway for saving into share plans,” he says. ”At launch, employers could invite experts or financial advisors to present the benefits in an engaging and informative manner. Share plan champions or teams can address any questions and host virtual sessions using video conferencing tools where employees can connect with them to seek clarification or guidance, creating a collaborative and interactive atmosphere during the sessions.” 

A share plans app can track savings and monitor growth for employees, as well as help them choose new schemes or increase or decrease contributions in ones that allow adjustments, such as Sips. A modelling tool can allow them to see potential gains and make informed decisions.

”Share schemes that allows staff to particpate via auto-enrolment or payroll deduction can help take the decision-making out of saving,” adds Nasir. 

Whichever scheme employers choose for their organisation, they need to explain the mechanics to ensure employees are engaged with the benefit and enable them to make informed decisions.