High calibre employees are like hot cakes in the digital creative sector at the moment.

Every week here at MAP HQ we’re involved in conversations with agency owners on what can be done to attract, retain and motivate key employees.

There’s no doubt that there is a shortage of talent in Manchester at the moment, and when you have the likes of Amazon now knocking on your door it’s more important than ever to differentiate yourself to the competition.

How To Differentiate Yourself To The Competition

One way to do just that is to have in place an employee incentive program which is operated through an Employee Benefit Trust (EBT).

The main benefit of doing so is that it aligns the interests of the employees with those of the business. If the incentive program is a cash bonus scheme, you can make sure the business makes a level of profit before the bonus scheme pays out. If it’s share options, you can tie the award of shares to a given level of performance by the employee.

Your team are then bought into the success of the business in a whole new way. If the business wins, so do they.

Where the EBT fits in is that it becomes the vehicle, separate from the business, through which the benefits can be delivered to the employees.

The trust would hold the shares or the cash as assets, and the employees become beneficiaries of the trust. It can apply to employees across the entire business or a select few such as your senior team, and it allows flexibility when it comes to new starters and leavers being involved.

The first advantage of doing it in this way is that it can be particularly tax efficient. The trust doesn’t have to operate in the UK where your Limited Company is based, it can be based offshore where the tax treatment is more lenient. Secondly, it’s a separate entity to your Limited Company.

That protects it from any financial difficulties the agency may face, and if the business needs to close down for some reason it’s creditors cannot access the assets in the trust. It’s another thing which is a big selling point to your employees who are the beneficiaries of the trust.

Being a separate entity also means that it can be governed by an appointed trustee, who has the interests of the beneficiaries in mind and not the company.

As with any tax planning, professional advice must always be taken. But as a way to encourage loyalty and align the goals of the business and the team, it’s a great option worth exploring further. If you’d like to do that, please give us a call and we’ll be more than happy to help.

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