Firm News
Murphy Salisbury Scoop New Client with Share Scheme
Chartered accountants Murphy Salisbury are celebrating a new addition to their client portfolio this month based on the merits of an initial instruction to implement a share option scheme.
Bobby Gupta, a Tax Specialist at Murphy Salisbury, was drafted in to structure an Enterprise Management Incentives (EMI) scheme that would ultimately see Adept Management partner with the Warwickshire-based accountants.
Commenting on the appointment, Gupta, said: “Adept Management’s highly-skilled workforce was quickly able to grasp the more technical aspects of the EMI and readily demonstrated their comprehension of the personal implications and rewards that such a scheme would throw up.”
Adept Management provide design management solutions to the construction industry and other engineering sectors from their base in Coventry. Seeking to introduce an incentivised loyalty scheme, the company instructed Gupta and his team to oversee the implementation of EMIs for 12 senior employees, 4 of which were company directors.
EMI schemes, aka share option schemes, are approved by HM Revenue & Customs and assist small companies in recruiting and retaining high-calibre employees who are essential to the continuing success of their business.
The basic premise involves payment in share ‘options’ – ie, the right to acquire shares in the company at a future date – and can replace the issuance of bonuses paid in cash. The value of those share options are normally agreed with HM Revenue & Customs and are realised through a sale or flotation, which is why EMIs are especially useful when there is a clear exit strategy. The employee is generally exempt from making National Insurance contributions on the profit element, which is ordinarily liable to a flat rate of 18 per cent tax. The scheme offers an extremely tax-efficient way of locking in, rewarding and remunerating employees while still allowing the business to claim Corporation Tax relief.
EMIs are proving increasingly popular with owners of small businesses, advises Gupta. “For small businesses across the board, it seems to work very well. Employees are encouraged to create value and share in the growth of the company.
“We complete around ten such instructions each year and are currently mandated on two or three. We’ve set up schemes for businesses with one employee and for those with a staff of 50. For Adept, we designed a new type of scheme – a B-share scheme – to bring down the HM Revenue & Customs’ valuation to a level that was acceptable to everyone. It was challenging but rewarding and earned us a valuable new account.”
To find out more about how working with our leading firm of accountants in Stratford-upon-Avon and Warwickshire can help you, please contact us.
