Gifting Shares to Your Staff – What Should You Consider?

More and more business owners are exploring ways to reward and retain key staff by giving them a stake in the business. While this can be a powerful incentive, the structure you choose can make a significant difference from both a tax and control perspective.

Here are a few key things to consider before gifting shares to employees:

1️⃣ Direct Share Transfers

You can gift shares directly to an employee, but this may trigger income tax charges based on the market value of the shares. It can also dilute ownership and voting rights immediately.

2️⃣ EMI Share Options

Enterprise Management Incentives (EMI) are often the most tax-efficient option for many UK SMEs. Employees receive options to acquire shares in the future, often with significant tax advantages if structured correctly.

3️⃣ Growth Shares

Growth shares allow employees to benefit from future growth in the company value, without giving away the existing value of the business. This can be very effective where the company already has substantial value.

4️⃣ Employee Benefit Trusts or Other Incentive Plans

These can provide long-term incentive structures while maintaining control and flexibility for the founders.

⚠️ The key point is that the right structure depends on your circumstances — the stage of your business, current valuation, future plans, and the role of the employee.

At LMJ Group, we work closely with business owners to design tax-efficient employee incentive structures that reward key people while protecting the long-term value of the business.

✔ Structuring the right share scheme
✔ Tax planning and valuations
✔ Implementing EMI and other share plans
✔ Ensuring compliance with HMRC requirements

If you’re considering rewarding or retaining key staff through equity, it’s worth getting the structure right from the start.

📩 Feel free to reach out if you’d like to explore what could work best for your business – sales@lmjgroup.co.uk