GEO INSIGHTS

The One Big Beautiful Bill Act of 2025 (OBBBA) brings several tax changes that affect equity compensation, including raising the SALT deduction cap from $10,000 to $40,000 through 2029, though the benefit phases out for incomes above $500,000. It also alters Alternative Minimum Tax (AMT) rules beginning in 2026, making it more likely high earners exercising incentive stock options will trigger the AMT. Additionally, the law expands Qualified Small Business Stock (QSBS) benefits and shortens holding periods for capital gains exclusions, while adding new limits on charitable deductions starting in 2026.

Admiral Group reported a 69% rise in first-half 2025 profit before tax to £521 million, with earnings per share up 72% and an interim dividend of 115p declared. Growth was driven by strong UK performance—motor profits rose 56% and household and money businesses more than doubled—alongside a 10% increase in customers to 11.4 million, though European insurance customers fell 3%. The group continued its record momentum from 2024, investing in technology and rewarding 13,000 employees with free shares, while maintaining a robust solvency ratio of 194%.

This helpsheet explains how Capital Gains Tax (CGT) applies to shares acquired through employee share schemes, including SIPs, SAYE, CSOPs, EMIs, and unapproved schemes. It outlines how to calculate the capital gains cost of shares, available reliefs (such as transfers to ISAs, pensions, or SIPs), and specific rules for restricted or same-day share acquisitions. It also details special provisions for Employee Shareholder Shares (ESS), including lifetime gain limits, and provides guidance on elections, claims, and compliance requirements.

NewRiver REIT plc announced that its Employee Benefit Trust has purchased 3 million ordinary shares to support current and future employee share schemes, reinforcing its commitment to staff and shareholder value. Analysts are mixed on the stock, with a recent Buy rating targeting £90.00 per share, while Spark’s AI analyst maintains a Neutral view due to bearish momentum and high leverage risks. NewRiver, a UK-based REIT specializing in retail assets, manages a £0.8 billion portfolio (7.9m sq ft) and £2.4 billion in total assets under management, focusing on retail parks, shopping centres, and regeneration projects.

CFOs should stop viewing compensation purely as a cost and instead treat it as a strategic investment aligned with business goals, using data-driven approaches that balance base pay, variable pay, equity, and benefits. A comprehensive compensation strategy helps retain top performers, manage underperformers, and attract talent even in uncertain markets, avoiding the costly turnover and inefficiencies of reactive, boom-and-bust pay tactics. By leveraging market intelligence and flexible incentives, companies can maximize the value of every compensation dollar and build resilience through economic cycles.

Equity compensation is a key tool for startups to attract and retain talent while conserving cash, offering employees ownership stakes that align their incentives with the company’s long-term success. Common forms include restricted stock awards (RSAs) and stock options (ISOs and NSOs), each with different tax treatments, benefits, and risks. While equity can motivate employees and provide significant financial upside, it also introduces legal, tax, and administrative complexities, making careful plan design and professional guidance essential.

This update highlights key global changes affecting employee share plans, including new or increased taxes in Belgium, Nigeria, Rwanda, and Argentina, as well as updated social security and taxation rules in Singapore and Vietnam. In the UK, the new PISCES framework will allow periodic secondary trading of private company shares, with draft legislation ensuring EMI and CSOP schemes can adapt without losing tax benefits, alongside clarifications on “Readily Convertible Assets.” Regular compliance deadlines across markets such as Australia, India, Saudi Arabia, Vietnam, and China are also noted to help companies stay aligned with reporting obligations.

Employee share plans allow staff to acquire shares in their company through awards, options, or purchase schemes, often with tax advantages. When designed and communicated effectively, they boost retention, motivation, and recruitment by aligning employees’ interests with long-term business success. Beyond financial benefits, these plans foster trust, engagement, and a culture of shared ownership that can significantly enhance company performance.

Employee share schemes allow companies to give or offer shares to employees, providing financial incentives, tax advantages, and helping with talent retention and engagement. Common schemes include Share Incentive Plans (SIPs), Save As You Earn (SAYE), Company Share Option Plans, and Enterprise Management Incentives (EMIs), each offering different tax benefits depending on the structure. These programs not only reduce tax liabilities for both employers and employees but also foster a positive workplace culture by aligning staff with the company’s long-term success.