The tax breaks may be tempting but investing in shares in the company you work for is not necessarily the shrewd financial move it might appear to be.

Employers can make use of four government approved schemes – Share Incentive Plans, Save As You Earn Schemes, Company Share Option Plans and Enterprise Management Incentive Schemes that offer tax advantages worth considering.

If you get shares under Share Incentive Plans (SIPs) and keep them in the plan for five years, you will not pay income tax on their value when you acquire them and you won’t pay capital gains tax when you sell them.

There are four ways to receive shares under SIPs. Your employer can give up to £3,000 worth of free shares. Then there are partnership shares – you can buy shares out of gross salary worth up to £1,500 per annum.

Matching shares are another SIP. Your employer can give you up to two matching shares for each partnership share you buy. Then finally there are dividend shares – dividends received from free, partnership or matching shares can be reinvested to buy more shares.

With Save As You Earn (SAYE) , you can save up to £250 per month from net pay. At the end of the contract term (three, five or seven years), you can use the accumulated savings to buy shares at a price fixed at the start of saving. There is no income tax on the difference in the set price of the shares and the market price when purchased.

A third method of investing in company shares is the Company Share Option. This gives you the right to buy up to £30,000 worth of shares at a price fixed at outset. With these shares, there is no income tax on the difference between what you pay for the shares and the original fixed price.

Finally there is the Enterprise Management Incentive. If your company has assets of up to £30 million, you can be given an option to buy up to £120,000 worth of shares. There is no income tax on the difference between what you pay for the shares when you use your option and what they are actually worth.