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Accountancy firm Moore Thompson explores how to attract the best candidates for vacancies at your businesses

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The UK is currently experiencing a shortage of workers in certain sectors and it is becoming increasingly challenging for some employers to fill much-needed positions, says Matt Upex of Market Deeping-based accountancy firm Moore Thompson.

There are various causes for this skills and labour shortage but the reality is that employers are increasingly having to find new and novel ways to attract the right candidates for roles.

When putting together a salary and benefits package, businesses need to take care not to expose themselves to increased costs from taxation and national insurance.

Matt Upex
Matt Upex

Although some incentives, such as offering a company vehicle or private health insurance, may seem simple they could incur bigger tax bills for a business.

Increasing employment costs can also put pressure on a company’s cash flow and so employers need to find a balance that allows them to retain and win the best employees without leaving their profits and overall viability exposed.

An increasing number of innovative businesses are looking at how they can offer key people in the business a share in the company’s success.

An enterprise management incentive (EMI) scheme is one such way that a business can reward success in a tax-efficient manner.

The EMI scheme is a Government-approved, tax-advantageous share option scheme that is predominantly used by small to mid-sized businesses looking to share their financial success with their team.

When a company establishes a share scheme, it selects employees and gives them the option of acquiring shares over a prescribed period, subject to qualifying conditions being met.

By doing this a company can offer an effective uplift in earnings, without having to increase wages, which would result in higher national insurance costs and a larger income tax bill for the employee.

This is because there is no income tax or national insurance charge on the exercise of an EMI option, as long as it was initially granted at market value.

Where the shares increase in value between the time of grant and when the options are exercised, the uplift is not charged to income tax or national insurance.

Moore Thompson
Moore Thompson

There will be a capital gains tax (CGT) charge when the employee disposes of their shares if the sale price exceeds the value per share at the time of sale but business asset disposal relief can help to reduce this rate of tax to 10 per cent.

The rules and criteria around employee share schemes are complex, which is why you should seek professional advice before creating a new scheme.

To find out how we can assist you with the creation and management of tax-effective share schemes get in contact with us or visit www.moorethompson.co.uk

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