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Are you missing out? HMRC questions why more companies fail to operate tax advantaged share plans


United Kingdom

HMRC has recently published the results of research which they commissioned Ipsos MORI to conduct into tax-advantaged share schemes (TASS). They wanted to understand the motives for adopting plans and to explore customer awareness and knowledge of the plans available.

Overall the research concluded that TASS are a good thing. They enhance employee engagement and are useful for employers in recruiting and retaining talent and remaining competitive.

What were the surprises? 

Overall there was low awareness of the specifics of TASS amongst the focus group of employers and employees.  This seems to be particularly true of the Share Incentive Plan, although it is a plan that can be adapted and used in different ways so perhaps that explains a lack of complete knowledge when compared with (say) the SAYE Plan, which is an option based plan, and so more straightforward to understand.

Perhaps less of a surprise, but younger more junior employees knew less about share plans and were less interested in company ownership.  This is a point worth addressing as generational fairness (or the lack of it) and a lack of the ability to invest capital by the next generation of business owners and managers means that incentives arrangements will need to be adapted to serve the interests of a cash strapped generation.

HMRC has also released new data on TASS uptake.  The EMI is by far the most popular plan with 12,410 companies operating an EMI in 2018/19.  In contrast, CSOP was operated by only 1,180.  Whilst the CSOP individual limit of £30,000 no doubt makes it less attractive than EMI, it is surprising that the take up for CSOP is so low.  SAYE was offered by 490 companies and SIP by 840.  Again, although both SIP and SAYE do need an investment in terms of set up and administration costs, they are valuable plans for employee engagement (and tax efficient remuneration).  It will be interesting to see if there is a rebound in the next set of figures.

In terms of the cost of TASS to the public purse, the most tax is saved by EMI, though SIPs allowed savings of £150 million in income tax relief and £110 million in NICS relief.

If you would like us to review the share plans you can offer, please contact us. TASS are not as complex to set up and operate as it seems many employers fear and are tax efficient for employees and employers.

Ipsos MORI TASS research:

National Statistics: Companies with TASS :

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