Non-Discretionary Tax Advantaged Share Schemes Government Call for Evidence

Following the announcement in the Spring Budget statement, on 5 May 2023, the Government published its call for evidence on non-discretionary tax-advantaged employee share schemes, Save As You Earn (SAYE) and the Share Incentive Plan (SIP), which can be found here.

The Government also published its final report on Share Scheme Evaluation – CSOP, SAYE and SIP, an independent research carried out by London Economics, commissioned by HMRC, which can be found here.

The research was conducted for the purposes of a quantitative, qualitative and econometric analysis of CSOP, SAYE and SIP, to provide insights into:

• the awareness and use of these schemes,
• reasons for opting in or out of them,
• the impact on businesses and employment outcomes,
• their association with a ‘savings culture’ among participating employees and
• the proportionality and appropriateness of these schemes.

Some of the key findings of the research, are as follows:

• Awareness of schemes was limited
• Companies and employees generally have a good understanding of these schemes
• Out of the three schemes, CSOP was most used (68%), then SIP (26%) and then SAYE (12%)
• Companies adopt schemes to improve employment outcomes by creating a feeling of ownership and improve staff morale, retain and attract staff
• Employees participate mostly to save
• Common reasons for not adopting these schemes include not meeting eligibility criteria and too small rewards
• The schemes appear to improve business and employment outcomes and claimant companies report positively
• There is mixed evidence that the schemes contribute to a savings culture
• The schemes’ suitability for smaller companies is doubted.
• Delivering the tax relief through upfront grants or discounts would add little benefit in achieving the schemes’ aims.

With specific regard to the call for evidence on SAYE and SIP, the Government intends to seek the views of businesses, business representative organisations, employees and persons interested in the tax-advantaged employee share schemes or the wider tax system, gather evidence on the current usage of these schemes and to identify whether they are effective in achieving their stated policy objectives

There are twenty-four questions which are grouped into the following five categories:

1. the effectiveness and suitability of the schemes and whether they are fulfilling their policy objectives
2. current usage and participation and whether there are barriers to participating in the schemes
3. whether the schemes’ rules are simple and clear as well as whether they offer enough flexibility to meet individual firms’ needs
4. whether the schemes suitably incentivise share ownership for lower income earners
5. what other performance incentives businesses offer their employees and how they compare with SAYE and SIP.

The consultation will close on 25 August 2023.

For further information, please contact JD Ghosh or Stuart James or Paul Norris.

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