Giving Shares to Employees
There are a number of approved share schemes that a company can use to provide its employees with shares in the company they work for, or options to buy those shares at a favourable price. The scheme designed for small companies to use is the Enterprise Management Investment scheme (EMI).
If the company chooses not to use one of the approved share or share option schemes and issues shares or options to its employees, there can be some very serious tax consequences, such as:
- The employee is taxed on the value of the shares he receives as if that value was part of his salary.
- The company must pay the employer’s class 1 NICs on the value of the shares issued.