The government has launched a consultation to seek views and gather evidence on non-discretionary tax advantaged share schemes - the Save As You Earn (SAYE) and Share Incentive Plan (SIP) employee share schemes. The government wants to find ways to improve and simplify the schemes to make them attractive once again. The data shows that since 2016 the number of companies and employees using SAYE and SIP schemes has declined and they want to address that. It comes as no surprise - at the Spring Budget back in March the government announced that it would launch a call for evidence on these schemes, so this was expected.
Alongside the Call for Evidence, the government has also published a report detailing key findings from the recent independent evaluation of SAYE, SIP and the Company Share Option Plan (CSOP) by London Economics. It found that companies mostly opt into share schemes to create a feeling of ownership, help retain and attract staff and especially skilled employees. Out of all surveyed companies aware of being registered for CSOP, SIP or SAYE, 81% indicated an improvement in employment and/or business outcomes, specifically staff retention and recruitment. In other words, these schemes are a very useful and there is a strong business case for them.
So, let’s consider that. Lynette Jacobs is a share plans specialist and earlier she joined me by phone to discuss it. First the background:
Lynette Jacobs: “In the last few years, the government has been reviewing tax advantaged schemes. So, it did a review of Enterprise Management Incentive options and then, following that, it decided to make some improvements both to the operation of EMI, Enterprise Management Incentive options, which we have discussed with you previously, simplifying some of the requirements for those. It's also, and again, I’ve spoken about this with you and our viewers, about amendments to the Company Share Option Plan, CSOP, doubling the individual limit from £30,000 to £60,000. It seems now that the government is sort of turning its eye to the all-employee tax advantaged schemes, so share save, SAYE, and the share incentive plan, the SIP and in the spring budget the government announced that it was going to be putting out a call for evidence on ways of improving and simplifying both those schemes.”
Joe Glavina: “So HR will have a role, presumably, in communicating this to staff and raising awareness of the advantages of these schemes?”
Lynette Jacobs: “Yes, correct Joe. Obviously, it'll be for each company to decide and, you know, I very much want to say to the people viewing this programme to speak with the relevant people within your company and respond to the government's call for evidence. I’m sure one of the points that many will be raising is the fact that for a SIP an employee has to be employed with the company, stay with the company, generally for five years to get the full tax advantage treatment, unless they happen to come within a good leaver specified reason, which won't be just because they are changing career, which many people do nowadays, and for share save it's a lesser amount of time, but it's still three years so, again, a lot of particularly younger employees tend to move more frequently so that may well be one of the calls that people will be asking, you know, simplify the schemes to make them more pragmatic to operate by coming up with some way that people can, perhaps, transport the options they're getting, or their awards, or perhaps sort of have a pro-rated amount of shares that they can acquire. So yes, that will definitely be one of the ideas people may present as a call for evidence.”
Joe Glavina: “What is the government’s rationale for doing this, Lynette?”
Lynette Jacobs: “I think it is to make them more attractive. They want to increase their take-up by companies within the UK, they want to give employees the benefit of companies operating these schemes. We are in the cost-of-living crisis and, clearly, people have to have money to put into these schemes but, nevertheless, they are a good way for perhaps more junior members of companies, employees, to participate and have the benefit of share participation that they wouldn't otherwise have and there have been many surveys that have shown that for some employees, the only savings they make will be under an SAYE or SIP and, equally, that starting to save under an SAYE or SIP takes an individual who hasn't previously had any habit of saving into the idea of saving and creates that ethos of saving and just generally has a more beneficial effect and impact on that individual and their family.”
Joe Glavina: “So the consultation will run until 25 August and after that the government will have to review the evidence which will take some time. So, when do you think we will see some changes?”
Lynette Jacobs: “That’s a good question. With it being the 25th of August this year, I would imagine the earliest there'd be any movement would be in the spring budget 2024 and perhaps later than that but, as with any of these things, I think government and HMRC aren't necessarily the fastest movers, but I think the important thing is that it's a start, and they're going out to all key stakeholders. They're asking some advisors - so we've been approached by HMRC for any input - I know they've approached bodies like Proshare and the Share Plan Lawyers group, and the ESOP centre and they have also gone out to the savings providers, so the people who are operating the savings for share save and the trusts and savings for SIPs, and I imagine they will also be going out to employers as well, larger employers, and asking them for their views. So, it will give the opportunity for those who work with these plans on a day-to-day basis to give their input and hopefully have positive outcomes.”
The government’s consultation closes at 5pm on 25 August 2023. If you would like to respond to the call for evidence, then be aware that the Treasury is currently unable to respond to responses or queries sent in the post. Instead, you’re asked to submit your response by online survey. We have put a link to the survey, and the consultation paper, in the transcript of this programme.
LINKS
- Survey for responding to Call for evidence: Non-Discretionary Tax-Advantaged Share Schemes
- Call for evidence: Non-Discretionary Tax-Advantaged Share Schemes
