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Employer Shares

If your employer is a start-up or listed company, you might get company shares as part of your pay. This can be a great perk, but it can also be tricky. There are a bunch of different schemes. Each one has its own rules and tax implications, which can get confusing, quick!

Some common examples include:

Restricted Stock Units (RSUs):

These are shares awarded to you outright, but with restrictions on when you can sell them. Typically, these restrictions lapse over time or are tied to performance goals.

Employee Share Purchase Plans (ESPPs):

These plans allow you to purchase company shares at a discounted price, often through payroll deductions.

Employee Share Schemes (ESS):

This is a broad term encompassing various types of share plans offered to employees.

Dividend Distribution Schemes (DDS):

These schemes allow you to receive dividends on your shares.

Understanding the specific details of the share scheme offered to you is crucial, as it will impact your tax liability and your overall financial strategy.

Once you’ve been granted company shares, you’ll need to make decisions about how to manage them. Should you sell them immediately to realise a profit? Should you buy more shares to increase your stake in the company? Or should you hold onto them and hope that their value appreciates over time? These decisions can be challenging, and the best course of action will depend on your individual circumstances, financial goals, and risk tolerance.

Navigating the complexities of employee share schemes and making informed decisions about your shareholdings can be overwhelming. Seeking guidance from a qualified financial advisor can help you understand your options, assess the potential risks and rewards, and develop a strategy that aligns with your overall financial plan. At Mission Wealth, we can also help you optimise your tax and ensure that you’re making the most of your employee share scheme benefits.

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