The Government’s new Employee Share Ownership scheme (ESO), which came into effect on 1 September 2013, has received a very muted welcome, bordering on total indifference, from the business community and its advisers.
The scheme allows employees to give up some of their employment rights in exchange for shares valued between £2,000 and £50,000 in the company that employs them.
Although Income Tax is payable by the employee on the value of any allocation of shares in excess of £2,000 in value, the shares will qualify for exemption from Capital Gains Tax.
Given the reliefs available under the Enterprise Management Incentive scheme (EMI), the take up is expected to be small, although where a trade sale of the shares within a relatively short period is likely and those affected are the most senior employees, an ESO may prove a worthwhile alternative to an EMI.
The ownership structure of your business is an important consideration, as is the planning of your exit strategy.
We can advise you with regard to the legal and practical issues involved.