business focus


What the Thames Valley Really Needs


Reading the excellent and fascinating EY report, The Thames Valley – A framework for growth, I was struck by the clear messages about people and skills, writes Mark Swain, director, The Henley Partnership


Chartered accountants Haines Watts presents a series of articles based on its blogs and welcomes your feedback at hwca.com/blog


of the month


Enterprise Management Incentive (EMI) schemes are government approved, aimed at smaller companies. They provide share options to key employee’s tax efficiently, as a reward for their efforts within the business or to retain and incentivise key staff.


And as the report talks about competitiveness requiring “greater collaboration between educators and employers”, your local business school should probably throw its hat in the ring ...


In our language, what the Thames Valley really needs is to be crammed full (imagine a Reading-London commuter train) of the most talented people in the UK. Much of this boils down to attracting, and then developing, the best quality managers and leaders. Uncertainty around Brexit screams the need for leadership agility. Boards need to think systematically about how to maximise and mobilise the region’s diversity and skills mix. Productivity requires top-notch managers that enable change and deliver effortless execution. And picking up the report’s theme of encouraging companies to “invest in technology, leadership skills and workforce development”, large and small businesses need to disrupt markets, and drive digital transformation.


These are fortunately all themes we cover in The Henley Partnership, Henley Business School’s simple and smart way to give senior leaders access to top-end learning and leadership development. And look out for our apprenticeship levy programmes that offer the opportunity for Thames Valley businesses to develop these leadership skills. Banish the myth that the levy is just for 16-18 year old apprentices. We have new funded solutions for talented managers and senior leaders.


After my latest 75-minute car journey from Reading to Thatcham, I’d love to say Henley Business School can fix the issues around congestion. But instead keep me focused on the report’s insistence that we “create a compelling proposition to attract and retain talent”. If you see people development as about finding and keeping the best people, there are many low-cost, high-value options available to every employer. Why not get in touch for an initial discussion?


Due to favourable tax treatment of EMI schemes it is possible for an employee to receive shares free of income tax and national insurance (NI) contributions and then potentially only pay capital gains tax at 10% upon disposal of their shares.


Setting up an EMI scheme sooner rather than later brings benefits too in terms of the HMRC share valuation. For an owner with ambitious growth plans for their business, it’s in their interest to keep this valuation as low as possible.


Due to the tax advantages, it is necessary under European law to have approval from the European Commission under the EU State Aid rules. EU State Aid approval was renewed on May 15.


Companies can now proceed to grant new options under existing schemes or set up new schemes, confident that the tax advantages will apply.


Key benefits:


• Share-ownership is a motivating factor for key employees, as it provides a vested interest in the ongoing success of the business.


• Employees feel like they’ve received a potentially lucrative bonus.


Mark Swain 01491 418855 thp@henley.ac.uk henley.ac.uk


42 businessmag.co.uk


• Employees are less likely to leave, which helps secure your succession planning. There is no tax suffered by the employee or employer on the grant of a


of the mo of the of t


EMI schemes are back writes Rodney Style, partner, Haines Watts


share option. • A motivated workforce concentrating on the long-term future of the business could help a company be more attractive to potential buyers.


A useful way to encourage loyalty:


• EMI shares are usually offered as options with a 10-year lifetime. Businesses with a low staff turnover can plan better for the future.


• All HMRC share valuations are done in advance of setting up an EMI scheme. Employers and employees know where they stand.


• Companies should receive a deduction in tax on the difference between the share option exercise price and the market value of shares at the point of exercise (often at the point of sale).


• Capital gains tax applies at just 10% to growth in shares held through an EMI scheme when they are sold as long as they meet the qualifying conditions.


• The allocation of share options under an EMI scheme doesn’t incur any tax or NI liability for an employer or the employees who are receiving the benefit.


It is important to obtain bespoke tax advice before implementing a share scheme. To discuss your EMI options or any other tax advice in more detail contact Rodney Style:


01865 37 82 82 oxford@hwca.com See more at:


hwca.com


THE BUSINESS MAGAZINE – JULY/AUGUST 2018


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