Saturday 20 October 2018

Employment: After a false start Donohoe revises employee SME share incentives scheme

 

Best practice: Niall Dorrian welcomes crowdfunding rules. Photo: Conor McCabe
Best practice: Niall Dorrian welcomes crowdfunding rules. Photo: Conor McCabe
Gavin McLoughlin

Gavin McLoughlin

Paschal Donohoe is attempting to overhaul the share option scheme for SMEs and encourage more uptake in the initiative.

The so-called KEEP scheme was introduced last year, aimed at reducing the tax burden attached to share options at SMEs.

Share options are seen as an important way of enabling small and medium businesses to attract and keep talent. They allow financial incentives to be given to staff without having to hand over cash.

But the scheme had been criticised by industry players who said it was too restrictive in terms of the amount of share options that fell into its remit.

"I am aware that take-up has been less than expected and I have decided to take early action now," Mr Donohoe said. The Finance Minister is increasing the amount that can be awarded in one year in share options to 100pc of salary from 50pc.

That move has been welcomed by industry groups, but other areas of the scheme that have sparked dissatisfaction were untouched. For example, the fact that the scheme only employs to full-time employees remains unchanged.

The Government will also move to regulate crowdfunding and overhaul the Employment and Investment Incentive Scheme (EIIS) in moves aimed to increase the diversity of funding sources available to business.

Peer-to-peer lender Linked Finance welcomed the move to regulate crowdfunding.

"Developing a formal regulatory framework for the sector will help promote best practice and continued lender confidence," said chief executive Niall Dorrian.

The EIIS, a programme to encourage investment in companies by providing tax reliefs but has struggled to be relevant to firms, is to be made "more efficient".

Mr Donohoe also said he was extending corporation tax relief for profit-making start-ups which create and maintain jobs, extending the programme until 2021.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business