Enterprise Management Incentives – A tool in the war for talent

With a highly competitive labour market, retaining a skilled workforce and rewarding long-term loyalty are key priorities for businesses in all sectors, but particularly the Engineering and Manufacturing sector.

According to recent research, businesses in Scotland are struggling to recruit and retain workers with the right skill set. A popular method for many privately owned companies, over and above the standard remuneration and benefits package, is to offer some element of share ownership, which could be an Enterprise Management Incentive (EMI).

An EMI is an employee share ownership arrangement approved by HMRC, and is available to qualifying companies and qualifying employees, allowing employers to grant options over shares to employees tax efficiently. The scheme also acts as a reward for their effort and loyalty to the company and/or to retain and incentivise staff.could benefit your

There are tax benefits to both employees and employers, providing they meet all the qualifying conditions:

• Employees – there is no upfront money required by employees and any growth in value will be taxed under Capital Gains Tax rules at a rate of 10%, if the option or shares are held for 2 years, i.e. no Income Tax or National Insurance charge; and
• Employers – the costs to set up the share option plan will be corporation tax deductible, as will the cost to the company of the shares issued.

Partner and Head of EQ Engineering & Manufacturing, Ross Oliphant, commented;

“When the owners and employees’ interests are aligned, there is clear evidence to show that this leads to greater retention and participation. An EMI Scheme is a fantastic way to motivate and reward key employees and this flexible share option plan will increase in popularity”.

For further advice or support, please contact Head of EQ Engineering & Manufacturing, Ross Oliphant, or contact our Glenrothes office on 01592 630055.