ERSM300010 - Tax-advantaged schemes: Introduction

The concept of tax advantaged share schemes originated in FA 1978 with the introduction of approved profit sharing schemes (APSS) (see below). In FA 1980 the Savings Related Share Option Scheme was introduced and this is still going strong today. It is an all employee, no risk, share option scheme that links regular savings with share options. Discretionary share option schemes were introduced by FA 1984. They are also referred to as company share option plans (previously known as executive share option schemes) and, as the previous name implies, employees are selected to participate rather than the company being obliged to invite all employees to take part. It is still the most popular of the approved schemes.

FA 2000 introduced two completely new schemes, the Share Incentive Plan (SIP) and the Enterprise Management Incentives (EMI). The former is a scheme intended to replace the APSS with the flexibility to provide different types of share award and, like SAYE, it is an all employee scheme. EMI, unlike the other schemes does not have an approval process, as it is designed to minimise the administrative burden and is intended to help small higher risk companies recruit and retain skilled employees.