Tax-Advantaged Employee Share Schemes: Analysis of Productivity Effects - CLEO Skip to main content


This study involved an examination of the impact of tax-advantaged share schemes on UK company performance (whereby companies reward their employees by granting them shares, or share options, as part of their remuneration package). Such employee share schemes are the subject of public policy concern since, on the one hand, they can be costly to the government, and on the other hand, such incentives are currently deemed to be warranted because share schemes are associated with increased productivity in the firms concerned. The project drew on Oxera’s ability to analyse complex policy issues and develop and apply robust quantitative techniques to gain valuable policy-relevant insights. As a first step, a detailed literature review provided a comprehensive overview of prior research and a thorough understanding of the modelling issues highlighted. Oxera then undertook an extensive data collection exercise, which required the matching of three separate data sources in order to gather a dataset for analysis. A range of quantitative techniques, including descriptive statistics and econometric analysis, were combined to provide a robust analysis of the policy questions. The results indicated that the use of a tax-advantaged share scheme is not sufficient on its own to increase company productivity. However, there is some evidence that certain schemes in large companies may have an effect. For tax-advantaged schemes to be effective in increasing productivity, other factors such as the existence of non-tax-advantaged schemes, company size, and being a listed company increase the probability of a significant productivity effect.