Employee Share Schemes
If you work for a company, you may be offered shares (or rights in relation to shares) of your company's stock as a reward for contributing to the company's performance. In the U.K., some schemes are eligible for special tax reliefs. These are known as "approved" share schemes and include the Share Incentive Plan, the Save As You Earn Plan, the Company Share Option Plan and the Enterprise Management Incentive scheme. Other employee-share schemes, for which special tax reliefs are not available, are also very popular in U.K. companies and may include Long-Term Incentive plans and deferred bonus arrangements. Some companies create a trust known as an employee share ownership plan, or ESOP, to give employees a chance to own part of the business or to enable departing owners to sell their stake. Typically, the level of participation offered is based on factors such as an employee's seniority. These schemes are available in other parts of the world. For instance, in India, employee share option schemes were made popular by foreign firms operating in that country, particularly in the IT sector. They have recently become less attractive in the wake of the government's decision to levy a fringe benefits tax on such schemes.
