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Staff Retention & Incentives - Tax planning for growing businesses

This is a huge area and this note cannot cover all issues so I have concentrated on two: share incentives and tax effective payments and benefits.

Share Incentives

Approved share schemes can offer your employees a guaranteed right to subscribe for shares in your company at an agreed future date at today’s price. You can link the right to, among others, continuing employment, performance, or sale/flotation of the company. The latter can give employees a share in ultimate value with no cash commitment up front and no entitlement if they leave before the event but, in the meantime, no shareholder rights and all with a potential 10% tax charge.

There are various types of share scheme offering different benefits, with different qualification criteria. You should look at the rules in detail before making any decision. See also our page on Employee Share Schemes.

Tax effective payment and benefits

Set out below is a brief (and by no means comprehensive) list of some tax favoured payments:

               Allowances for business miles in private cars,40p pm for first 10,000 miles, thereafter 25p

               Provision of workplace parking – space or cost

               Incidental overnight expenses, e.g. telephone, newspapers, etc up to £5 per night

               Works transport facilities

               Employer provided cycles and safety helmets

               Late night transport home

               Annual party – up to £150 per head

               Childcare vouchers – £55 per week

               Mobile phones – now limited to one per employee – and extended to cover vouchers

               Reimbursement of removal costs up to £8,000

               Pension contributions

               Provision of uniforms or protective clothing

               Canteen facilities open to all staff at that site




Date: 4th April, 2007
Author: Cathy Corns


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