SAYE plan and SIP review: call for evidence

As part of the Spring Budget 2023, the government announced an intention to review two tax-advantaged all-employee share schemes widely operated by UK listed companies, Save As You Earn (SAYE) plans and Share Incentive Plans (SIPs), with a view to considering opportunities to improve and simplify these schemes.

The government recently published a call for evidence on these schemes, which seeks views on various aspects including their effectiveness in encouraging employee share ownership and barriers to participation, particularly for lower income employees. The call for evidence is open to any organisation, expert, adviser or other stakeholder with knowledge on the topic until 25 August 2023.

Research report into SAYE plans, SIPs and CSOPs

Dovetailing with the call for evidence, HMRC have published a research report compiled by independent policy and economics consultancy London Economics, which assesses the impact of these schemes and additionally tax-advantaged discretionary Company Share Option Plans (CSOPs). 

The report, which evaluates companies’ utilisation of the schemes, the role they play in driving performance and their suitability in today’s environment, reports that 81% of businesses say these schemes help boost their business, with almost three quarters of these saying they have helped them retain and recruit staff – yet a significant number of companies say they are too complicated to set up and administer. The report further explores the reasons why take up is lower amongst certain employee demographics and barriers – or perceived barriers – to participation.

The report is expected to be used support the government’s review of these schemes in conjunction with the government’s call for evidence published on the same day. 

Recent changes to tax-advantaged share plans

The publications follow:

• changes to the CSOP legislation introduced from 6 April 2023 that enable more companies to grant CSOP options – and for employees to receive up to double the value that they were permitted to receive at grant under qualifying CSOPs previously;
• changes to the EMI option scheme legislation introduced from 6 April 2023 (and to be introduced from 6 April 2024) that simplify the process for making EMI option grants; and
• the recent announcement in HMRC’s Employment Related Securities (ERS) Bulletin 51 that HMRC has updated the mechanism used to calculate SAYE option scheme bonus rates, which is expected to result in a bonus being provided to new participants for the first time since 2014.

Comment

The interest being signalled in supporting employee share ownership, and the possibility of a revamp to the all-employee schemes under what the government has coined a “shake up” to employee share schemes, has been welcomed by companies and the share plan advisory industry. 

The legislative framework for these schemes have been in place for decades and stakeholders have campaigned in recent years for changes to help make implementation easier for companies and participation more attractive and accessible to employees.

In particular hopes are that the all-employee schemes can be modified to boost participation by lower income employees and the youngest generation of employees coming through, amongst whom take up is typically as the lowest levels. 

Please contact Kathy Granby you would like to talk about your company’s share schemes.