Schemes offering people shares in their employer are set for a shake up as the government explores changes that will help boost business growth, supporting the Prime Minister’s priority to grow the economy.
In a new call for evidence the government wants to hear views on Save As You Earn and the Share Incentive Plan as it seeks to improve the schemes and expand their use by making it easier for businesses to set them up and offer them to staff.
This comes as an HMRC evaluation report shows that 81% of businesses say these schemes help boost their business, with almost three quarters of these saying it has helped them retain and recruit staff. 31% of businesses which are unaware of these schemes say they are too complicated to set up.
Victoria Atkins, Financial Secretary to the Treasury, said: `”Employee share schemes are an effective way to boost motivation in workforces by giving people an extra stake in what they do – and they offer a boost for business. Growing the economy is a priority for this government and one way to make this happen is by making these schemes as easy as possible to set up.”
The two schemes up for review are:
- Save As You Earn (SAYE): this allows employees to buy discounted shares in their company if they save money each month for three to five years.
- Share Incentive Plan (SIP): this allows companies to help their employees to purchase shares directly in their company or offer them as tax-free awards.
HMRC says 50% of companies which have set up a share scheme have done so to create a feeling of ownership among their staff, with other common reasons being to help retain staff and skilled employees, attract skilled employees and improve staff morale.
The call for evidence comes after venture capital firm Index Ventures praised government reforms to a separate scheme, the Company Share Option Plan, placing the UK as joint top among G7 countries in share option policy.
These reforms saw a doubling of the amount of share options employees can be granted and removed restrictions on which kind of shares could be included. Index said the moves the government took were “helping scale ups attract and retain the talent they need”.
The government is looking to replicate this success through similar reforms for SAYE and SIP and is particularly interested in understanding whether the schemes are attractive to lower income earners.
