HM Treasury has launched a new call for evidence on Non-Discretionary Tax-Advantaged Share Schemes which looks at Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes.

At a glance

The government sees employee share schemes as a key policy for promoting employee ownership, creating a stronger link between the production of capital and labour to help companies to grow and promoting savings habits amongst employees. However, since 2016 the number of companies and employees using SAYE and SIP schemes has declined.

The review of non-discretionary schemes was announced at Spring Budget 2023 and seeks views on:

  • The effectiveness and suitability of the schemes and if they are fulfilling their policy objectives.
  • Current usage and participation in SAYE and SIP schemes.
  • Whether there are barriers to participating in the schemes.
  • Whether the rules are simple and clear.
  • If the schemes offer enough flexibility to meet the needs of individual businesses.
  • Whether the schemes suitably incentivise share ownership for lower-income earners.
  • What other performance incentives do businesses offer their employees and how they compare to SAYE and SIP.

Alongside the Call for Evidence, the government has published a final report detailing key findings from the recent independent evaluation of SAYE, SIP and the Company Share Option Plan (CSOP) by London Economics which found that:

  • Awareness of the schemes is limited but companies and employees that are aware of being registered for a scheme have a good understanding of the scheme.
  • Employees have a good general understanding of the scheme they participate in with gaps in their understanding of how the tax relief works.
  • CSOP is the most used of the schemes evaluated, with 68% of claimant companies using it between 2015 and 2019.
  • Companies mostly opt into share schemes to create a feeling of ownership, help retain and attract staff and especially skilled employees and improve staff morale.
  • Employees mostly participate in share schemes to save.
  • Non-claimant companies’ reasons for not opting into a scheme include not wanting employees to have a controlling interest in the company, not meeting the eligibility requirements and being too small.
  • Non-claimant companies perceived the process of setting up and administering the scheme as complicated and difficult and found this a barrier to offering the scheme.
  • 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.
  • Companies and employees were generally satisfied with the current parameters and the delivery mechanism for the schemes.

Responses to the call for evidence can be sent online are required by 25 August 2023.

Useful guides on this topic

Employee Shares & Employment-Related Securities
What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme?

Employee Shares: setting up share classes with different rights for directors & employees
Can you set up different classes of shares? How do you create Alphabet or ABC shares? What are the rules in giving different classes of shares to directors and employees? 

EMI: Enterprise Management Incentive Scheme
What is the Enterprise Management Incentive (EMI) scheme? What's the difference between EMI and an unapproved share scheme?

External links

Call for Evidence: Non-Discretionary Tax-Advantaged Share Schemes 

Share Schemes Evaluation – CSOP, SAYE and SIP 

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