Employee share scheme shake up to help boost growth
Schemes offering people shares in their employer are set for a shake up as the government explores changes that will help boost business growth, supporting the Prime Minister’s priority to grow the economy.
- Simplified schemes offering people shares in their employer set to support business growth
- Comes as new figures show 81% of scheme users confirm they have helped retain staff and boosted business
- Changes also aim to boost participation among low earners
In a call for evidence launched today (5 June 2023), the government wants to hear views on Save As You Earn (SAYE) and the Share Incentive Plan (SIP), as it seeks to improve the schemes and expand their use by making it easier for businesses to set them up and offer them out to staff.
This comes as a HMRC evaluation report, also released today, shows that 81% of businesses say these schemes help boost their business, with almost three quarters of these saying it has helped them retain and recruit staff. 31% of businesses which are unaware of these schemes say they are too complicated to set up.
Victoria Atkins, Financial Secretary to the Treasury, said:
Employee share schemes are an effective way to boost motivation in workforces by giving people an extra stake in what they do – and they offer a boost for business.
Growing the economy is a priority for this government and one way to make this happen is by making these schemes as easy as possible to set up.
The two schemes up for review are:
- Save As You Earn (SAYE): this allows employees to buy discounted shares in their company if they save money each month for three to five years.
- Share Incentive Plan (SIP): this allows companies to help their employees to purchase shares directly in their company or offer them as awards, tax free.
These schemes are one of the tools the government has to drive economic growth, and today’s call for evidence is designed to gather feedback on participation in both schemes and find out how they can be improved and simplified, including how to make sure more people on lower incomes are able to take advantage of them.
HMRC evaluation published today shows 50% of companies which have set up a share scheme have done so to create a feeling of ownership among their staff, with other common reasons being to help retain staff and skilled employees, attract skilled employees and improve staff morale.
The call for evidence comes after venture capital firm Index Ventures praised government reforms to a separate scheme, the Company Share Option Plan, placing the UK as joint top among G7 countries in share option policy.
These reforms saw a doubling of the amount of share options employees can be granted and removed restrictions on which kind of shares could be included. Index said the moves the government took were “helping scale ups attract and retain the talent they need”.
The government is looking to replicate this success through similar reforms for SAYE and SIP and is particularly interested in understanding whether the schemes are attractive to lower income earners.
- Read the Call for Evidence here.
- Read HMRC’s report here.
- In 2020-21, 380,000 employees were granted SAYE share options worth nearly £2.6bn in that year whilst employees participating in SIP schemes received shares worth £780m.
- More details on SAYE: Tax and Employee Share Schemes: Save As You Earn (SAYE) - GOV.UK
- More details on SIP: Tax and Employee Share Schemes: Share Incentive Plans (SIPs) - GOV.UK (www.gov.uk)
- More details on the Company Share Option Plan: Tax and Employee Share Schemes: Company Share Option Plan - GOV.UK (www.gov.uk)
- More details on Enterprise Management Incentives: Tax and Employee Share Schemes: Enterprise Management Incentives (EMIs) - GOV.UK (www.gov.uk)
- Index Ventures country guides
Latest News from
Tougher rules to stamp out debanking03/10/2023 11:10:00
Changes to the rules which determine whether a bank can operate – known as Threshold Conditions - will ensure banks are upholding their current legal duties to protect freedom of speech.
Chancellor announces major increase to National Living Wage02/10/2023 16:25:00
The National Living Wage will rise to two-thirds of average earnings, the Chancellor announced today (Monday 2 October).
Treasury minister visits North East businesses29/09/2023 11:15:00
The Financial Secretary, Victoria Atkins MP, visited NETPark on 29 September to see how businesses are using full-expensing and R&D tax relief to help them grow.
Chief Executive Officer of the DMO to retire next year28/09/2023 16:15:00
Sir Robert Stheeman, CEO of the Debt Management Office, is retiring after over 20 years of public service.
Land purchased for flagship levelling up site in Darlington26/09/2023 15:22:00
The government’s levelling up programme is moving further ahead, with land for the permanent site of the new Darlington Economic Campus being purchased.
Welsh steel’s future secured as UK Government and Tata Steel announce Port Talbot green transition proposal15/09/2023 14:10:00
The UK Government and Tata Steel agree on joint investment package to secure a sustainable future for steelmaking in Port Talbot.
£12.4 million to help change choices about work12/09/2023 15:20:00
Six ground-breaking projects including an investigation looking at how endometriosis impacts women in the workplace have been awarded £12.4 million, the government has announced today, Tuesday 12 September.
Big steps forward in capital markets cooperation with India11/09/2023 16:10:00
Indian firms could soon list in London, it has been announced as part of a package of plans unveiled today by the Chancellor Jeremy Hunt alongside Indian Finance Minister Nirmala Sitharaman, as they met in Delhi for face-to-face talks.