The issue of employee share ownership has hit the headlines recently, driven by John McDonnell’s announcement at the Labour Party Conference in September of a plan to give workers more ownership of the companies they work for. Employee share ownership is widely held to enhance the bond between employee and employer, giving employees a real stake in the success of the business and having a knock on effect of increasing productivity.
There are currently two UK tax advantaged plans which are designed to incentivise broad-based employee share ownership – the Share Incentive Plan (SIP) and the Save As You Earn Plan (SAYE). These operate alongside the tax-advantaged Company Share Option Plan (CSOP) and Enterprise Management Incentive Plan (EMI), which companies can operate on a discretionary rather than all employee basis. Although all these plans operate in different ways, they all provide tax benefits to the employee and employer if certain conditions are met.