Experts in providing long term employee incentives and succession planning.
Our Employee Solutions team are highly experienced in providing a wide range of offshore employee benefit incentive schemes, which can help businesses recruit and retain personnel as part of an overall remuneration strategy. As the fiscal landscape constantly changes, new opportunities arise for more flexible structures to be put in place to benefit and continue to reward key employees. We can assist large corporates and small owner-managed companies to design and administer appropriate structures to meet clients’ needs.
Tax efficient structures
We pride ourselves on providing innovative and tax efficient structures. Amongst the structures we can offer are employee benefit trusts (EBTs), employee share option plans (ESOPs) and employer funded retirement benefit schemes (EFRBS).
We can advise on all types of wealth management structures around the world and the benefit and challenges each structure presents. One popular wealth structure is an offshore employment company for employers with personnel moving around the world. A company established in a tax neutral jurisdiction can be a useful way of mitigating the employee’s personal taxation and building goodwill. The offshore company could do more than simply hold the employment contracts; it can undertake various other administrative functions including payroll.
We work with a variety of businesses from large corporates to small owner-managed companies to design and administer appropriate structures to meet our clients’ needs.
Employee Share Ownership Plans (ESOP)
An ESOP is a defined contribution employee benefit plan that allows employees to become owners in the company they work for. Under an ESOP plan, companies provide their employees with the opportunity to acquire the company’s shares at a reduced price over a period of time. Using a trust structure removes the need to cancel, issue or transfer shares as employees join or leave the company.
Employee Benefit Trusts (EBT)
An EBT is effectively a discretionary trust, established as a tax efficient and flexible method of rewarding and incentivising key employees. An employer can make contributions to an EBT rather than paying bonuses directly to the employee. The trust can act as a warehouse for the shares until such time an employee becomes entitled to them or as a mechanism of holding shares granted to employees in the long term.
Employer Funded Retirement Benefit Schemes (EFRBS)
EFRBS allow employers to provide a benefit to employees in a simple and cost-efficient manner and at the same time provide tax advantages to the employer. Whilst the changes to the tax treatment of EFRBS removed some of the advantages, they continue to retain certain benefits when tailored as part of a bespoke tax structure.
Long Term Cash Bonus Schemes
This type of plan is formed as a method of providing an incentive to key employees over a period of time. These schemes involve an award of cash or shares to an employee dependent on them achieving certain performance targets. The awards can be retained in a trust and held until the employee’s targets are reached.
Phantom Share Option Schemes
These flexible schemes are cash bonus plans with the bonus determined by the increase in the value of the company’s shares subject to the option. No shares are physically issued or transferred to the option-holder on exercise of the phantom share option meaning that the company’s share capital is not diluted. The company is also entitled to benefit from corporation tax deductions.
Share Matching Plans
This is a tax efficient scheme established to enable companies either to give or sell shares in the company to employees. The shares must be held by the employee for a period of time set by the employer, following which the employer will generally match the shares held by the employee. Plans such as these are formed as long term incentives for employees of a company and can be offered as a valuable asset of a benefits package.
Payroll Administration Company Plans
The plan involves outsourcing payroll services to a third party, thus relieving the administrative burden on the company.