HM Treasury review of SAYE and SIP schemes

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 

1. If you are a business owner or manager, what is your business activity, when was your company created, where is it based and how many employees do you have?

2. If you are responding on behalf of a representative body or think tank, please briefly describe the body, its objectives, and its members.

3. Does your company offer an employee share scheme? If so, which one?

4. To what extent do you agree/disagree that SAYE and SIP are fulfilling their policy objectives?

5. If you offer SAYE or SIP to your employees, why did you choose to do so? If you are responding as a representative body, please specify your members’ main reasons for offering SAYE or SIP to their employees.

6. If you have chosen to offer only SIP or SAYE, what were the deciding factors of choosing one over the other? What do you see as the advantages of one over the other?

7. The number of companies using SAYE and SIP has not increased in recent years. In your view, what barriers exist that may impact a company’s decision to offer an employee share scheme? These could be barriers related to specific schemes or wider concerns.

8. The number of employees using SAYE or SIP has declined in recent years, what do you think has caused that decline? Do you have evidence to support this?

9. What proportion of employees participate in the share scheme(s) your company offers?

10. In your view, what are the reasons your employees give for choosing to participate in the scheme? If you are responding as a representative body, please specify what you think are the main reasons employees choose to participate in a share scheme.

11. What changes, if any, would increase participation amongst employees or change the way your company uses or offers the schemes?

12. In your view, is awareness of the benefits of SAYE and SIP low? How could the government and other groups raise awareness?

13. In your view, how easy or difficult is it to operate or administer SAYE and SIP? Please explain your answer and specify any ways in which the schemes could be simplified.

14. Do you feel SAYE and SIP offer enough flexibility to adapt to individual companies’ circumstances? If not, please state why.

15. Does your company make use of the current flexibility within the scheme rules? Do they vary the terms on which the employees participate? If so, in what ways?

16. Does participation in SAYE or SIP amongst employees vary according to remuneration? If so, in what ways?

17. In your view, does employee motivation or the reasons for participating in a share scheme vary according to different levels of remuneration? If so, in what ways?

18. If you are a company or a scheme user, does your company currently make use of the flexibility of the rules and vary the terms on which your employees participate according to remuneration?

19. In your view, are SAYE and SIP appropriately targeted towards lower- and middle-income earners?

20. In your view, what barriers exist that might prevent lower-income earners from participating in an employee share scheme?

21. What other performance incentives does your company offer? How do these compare to SAYE and SIP?

22. In your view, how are SAYE and SIP valued by employees compared to other forms of remuneration or incentive?

23. Would your company have granted options or awards to employees outside of SAYE or SIP in the absence of those schemes?

24. Is there any other information you would like to share with us in relation to these schemes?