HMRC has published its latest batch of share scheme statistics, which showed that UK employees enjoyed estimated tax relief of over £1bn from tax-advantaged share schemes in the year to April 2016.

This year’s figures showed particularly strong growth in the use of Enterprise Management Incentives (known as EMI options), with the value of shares under EMI options granted in the year increasing by 23 per cent from the last set of statistics published two years ago. EMI options offer companies the opportunity to give employees a chance to share in the growth and success of a business, with any gains made on the sale of the EMI shares generally only subject to 10 per cent tax, which compares favourably to cash bonuses or ‘unapproved’ share options which are taxed at rates of up to 47 per cent for the employee and 13.8 per cent for the employer.

Although HMRC does not provide a regional breakdown of the statistics, there has been huge demand from North West businesses for share schemes over the past couple of years. Not least for EMI schemes where employers want to provide a real incentive to key employees to drive business performance, increase shareholder value, and give those individuals a stake and sense of ownership of the business.

The North West is a hot bed of entrepreneurial businesses and high-growth companies, and this could explain the increase in demand as leaders of ambitious businesses increasingly recognise that performance can be substantially improved where employees have a stake in the company they work for. The fact that this can be done in such a tax-efficient way, enabled by the government’s desire to encourage the small and medium-sized businesses, makes the use of arrangements such as EMI options a no-brainer for many companies to improve performance and retain key talent.

Martin Cooper, RSM’s head of employee share incentives in the North West

The results of the latest Quarterly Economic Survey (QES) from the Lancashire Chambers of Commerce shows that businesses are reporting solid growth, with expectations that turnover and profitability will improve getting stronger.

The Q1 2017 survey, compiled by the county’s Chambers of Commerce in association with Moore and Smalley Chartered Accountants and Business Advisors, shows that the manufacturing sector performed strongly in the first quarter of the year, particularly in the exports market, with the number of firms reporting improved sales and orders higher than in previous quarters. However, the rising cost of overheads and raw materials are presenting as a risk to growth in the medium term.

Although the performance of the services sector has not returned to historic trend levels, it is improving from its decline in the two quarters immediately following the EU referendum.

The results of the survey found that businesses are continuing to feel inflationary pressures. The percentage of manufacturers reporting raw materials as the key driver of increased prices is at the highest since Q4 2011, and in both sectors a significant proportion of firms anticipate having to raise their own prices over the next three months.

Commenting on the first quarter results, Babs Murphy, Chief Executive of the North & Western Lancashire Chamber, said: “In the here and now, many businesses are resilient and experiencing solid growth. Many firms tell us their short-term expectations are strong, but that the medium-term picture is far from clear.

“The rise in inflation seen since last year’s EU referendum is the biggest immediate pressure facing most firms. While manufacturers have enjoyed a good quarter, they are facing higher costs at the factory gates, which increasingly translates into companies having to raise their own prices. With inflation already above the Bank of England’s target, this squeeze on firms looks set to continue in the medium term.

“The myriad of upfront costs imposed by government – including business rates, Apprenticeship Levy, National Living Wage and insurance premium tax – are all adding to the overhead costs of firms and the pressure on prices.

“If higher inflation squeezes consumer spending as we expect, the current strength in business activity may not be enough to prevent a period of more muted economic growth.”

The results from the Chambers of Commerce survey were revealed to an audience of local businesses at Preston’s College this morning (Tuesday 11th April) by Stephen Gregson, Corporate Finance Director at Moore and Smalley. Commenting on the survey, he said:

“We often say that the QES has thrown up another interesting set of results. And sometimes that is truer than others. This is one of those times. In many respects it suggests a stronger performance than the last quarter or even a year ago – more so for manufacturing. But there is also some seemingly significant weakening in some areas- cash flow strength for instance.

“What we can say with absolute certainty is that the QES continues to perform a sterling job, not in giving us the answers to the questions – but in highlighting which might be the most relevant questions to ask.”