On Tuesday, 1 August 2023 the Centre brought together a group of employee share plan enthusiasts for a round-table style chat about their burning Eso issues.
Topics included: Call for Evidence on SAYE/SIP which seeks views on the current usage of the schemes and whether they are effective in achieving their policy objectives; Cut in CGT exemption, a disaster waiting to happen; HMRC launch of a new SAYE bonus rate mechanism; and Global Share Schemes.
Top of the pile, and following on from the Centre’s April Esop Sofa panel discussion, was the Call for Evidence on SAYE and SIP schemes, which had been launched in the meantime. All attending agreed the need to make a submission to ensure the government receives as many responses as possible. That goes for other Centre members too, since numbers count. The closing date is Friday, 25 August 2023.
The number one change called for was leaver flexibility within SAYE-Sharesave. Companies should be able to designate a resignation as a ‘good leaver’. At the moment it is absolutely clear that an employee who resigns is classed as a bad leaver.
Other suggestions included:
Most beneficial from a plan issuer company’s point of view:
Cut in CGT exemption is a disaster waiting to happen – the CGT exemption limit was reduced to £6000 this year and will be reduced to £3000 from April next year. This has caused concern for plan issuer companies. They had been telling their staff that SAYE is simple and risk free, but now participants will be hit by complex tax reporting.
The best solution would be a carve-out for companies and share plans. An example was cited where, after a company’s employee shareholders enjoyed massive gains, the company invited someone to come in and explain the options available to them and the tax implications, so that they could decide what was best for themselves. Employees need to be are aware of the background information, so they know what they are getting into.
HMRC recently launched a new SAYE bonus rate mechanism. It has been a long time since bonus rates were around, but now they are back because of the rises in interest rates. Companies can use this to entice employees to take part in the scheme. When the bonus rate was abolished, though, it was expected that SAYE participation would go down, but it didn’t (certainly not as much as expected). However, anything that will help get more people into SAYE should be welcomed.
To finish with, the discussion turned to Global share plans. It was reported that some companies that run Esops in several territories, find the US style ESPP a lot easier to use as it is less complex than the UK tax advantaged schemes. All employees, no matter where they are based, are on the same plan, with no particular group advantaged. The consensus was that this was a good solution, though it does depend on the number of countries involved.
Thank you to Darren Smith of Global Shares, who chaired the lively discussion, and to everyone who took part.