Share incentives could help SMEs in hunt for talent

An overhaul of the manner in which employees can take up company shares without being prohibitively taxed could give SMEs a fighting chance of attracting talent and flourishing.

Share incentives which are supposed to attract employees are instead acting as a disincentive due to the tax levied against them, the Irish Pro-Share Association (IPSA) claims.

This system — which is in stark contrast to that in the UK — is limiting the potential of smaller companies who cannot compete with multi-national salaries.

“The UK has a very successful model that allows small enterprises to attract talent through share incentives,” IPSA chief executive, Gill Brennan said ahead of the organisation’s annual conference next week.

“In the UK, shares to a value of £250,000 can be given to attract an employee and the value of these shares is not taxed until they are disposed of.

“However, here in Ireland we tax share incentive too early, even though in reality there is no ready market for them. It can only be described as an Irish joke, the non-incentive incentive.”

The wider impact of SMEs losing the so-called war on talent is the limiting factor it has on the country’s indigenous industries — particularly the technology sector which often finds itself in direct competition with companies such as Apple, Facebook, and Twitter.

The IPSA — which is an independent association operating under the Ibec umbrella — says this level of competition precludes Ireland from ever creating a company of similar scale.

Tweaking the tax system to better mirror that of the UK would be, “at worst, tax neutral” and could in fact deliver a significant bonus to the country, said the IPSA.