Surprise fall in employee share schemes

The total number of companies operating tax-advantaged employee share schemes fell between the fiscal years 2013–14 and 2015–16, according to figures released today by HM Revenue & Customs.

Overall, 10,720 companies had share schemes in operation during the tax year 2015–16, down six percent on 11,460 in 2013–15.

Owing to technical problems at HMRC, no official statistics were published for the intervening year 2014–15.

Employee share schemes allow companies to sell or award shares directly to their staff. HMRC offers four share schemes that have tax-advantages to both employers and employees.

Despite the overall fall in the number of companies operating tax-advantaged share schemes, there was a 25 percent increase in the number of companies with all-employee schemes.

Save As You Earn (SAYE) — also known as Sharesave — rose from 440 to 520 between April 2014 and April last year, an increase of 18 percent. The SAYE scheme is very flexible because employees can save either a little or a lot each month, allowing them to purchase shares at the end of their savings contract, often at a discount.

Meanwhile, there was a rise of almost ten percent in the use of the Company Share Option Plan (CSOP), which was set to disappear a few years back, but for the intervention of the Esop Centre. The CSOP is extremely useful to companies who have many low-paid employees, because participants do not have to pay any money up front in order to hold the share options.

Although the use of the Share Incentive Plan (SIP) was down slightly during the two years ending April 5 2016, more companies are using partnership and matching shares to offer their employees ‘skin in the game’ through share ownership.

Today’s figures also reveal a six percent fall in the number of companies operating Enterprise Management Incentives (EMI), the tax-advantaged share scheme introduced by Gordon Brown in 2000 to encourage productivity in SMEs.

Centre chairman Malcolm Hurlston CBE said he was glad share schemes were ticking along even though they were not playing the part they could in promoting equality.

These tax breaks cost up to £1bn and it is money well spent. But the government needs to put its heart into it too. If we see a quote from a minister by the end of the day I shall be pleasantly surprised.

 

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