The Government’s new Finance Bill has confirmed a €50,000 increase in maximum value of share options that can be granted under its Key Employee Engagement Programme (KEEP), to €300,000 in any period.

Article by John Mulligan on

It had previously been subject to a limit applied in a consecutive three-year period. The scheme, introduced a year ago, was intended to help SMEs to attract and retain talent in a competitive labour market.

But it’s been woefully unsuccessful, prompting Finance Minister Paschal Donohoe to make amendments to it in this month’s Budget.

He acknowledged during his Budget speech that take-up of the scheme had been less than expected and he was “taking early action” to address it.

The new Finance Bill also confirmed that the maximum annual market value of share options that can be granted to an employee or director in any one year can now be the equivalent of up to 100pc of salary.

A €3m overall limit remains for companies on the value of share options they can allot under the KEEP programme, while employees are not restricted from entering into future KEEP arrangements with future employers.

Under the KEEP incentive, gains realised on the exercise of qualifying share options granted between January 1, 2018, and December 31, 2023, will not be subject to income tax, USC or PRSI. In order to qualify for KEEP, an option must be exercised within 10 years of grant.

Gains are subject to capital gains tax on disposal of shares, however.