UK government consults on all-employee share schemes

The government has launched its call for evidence on tax-advantaged all-employee share schemes, to find out how they can be improved and simplified.

First announced at Spring Budget 2023, the consultation was published on 5 June 2023. The government wants to hear views on the UK's tax-advantaged all-employee schemes, namely the Save As You Earn (SAYE) Scheme and the Share Incentive Plan (SIP). It will use the responses to consider whether there are ways to improve and simplify the schemes and expand their use.

The government is particularly interested in understanding whether the schemes are attractive to lower-income earners and how to make sure more people are able to take advantage of them.

Alongside the launch of its call for evidence, HMRC published an evaluation report showing that 81% of businesses say these schemes help boost their business. Victoria Atkins, financial secretary to the Treasury, said that "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."

Following the recent improvements to tax-advantaged discretionary plans (the company share option plan and enterprise management incentive options, as covered in our recent Employee Incentives Update), the reform of all-employee schemes is a logical and welcome next step. 

SAYE bonus rate mechanism

Companies operating or considering introducing a SAYE Scheme should note that HMRC has updated its mechanism for calculating the bonus rates for SAYE participants. The mechanism will apply from 18 August 2023 and is expected to result in a bonus being provided to new participants for the first time since 2014.

Further information is set out in Employment Related Securities Bulletin 51 (May 2023).

Employment-related securities annual returns | 6 July 2023 deadline

Separately, companies operating employment-related securities arrangements are reminded that the deadline to file their annual returns (or a nil return, if appropriate) for the tax year ending 5 April 2023 is 6 July 2023.

The reporting obligation applies to all employment-related securities arrangements, including discretionary and all-employee tax-advantaged schemes and non-tax advantaged arrangements.

On 12 June 2023, HMRC published guidance for companies on how to deal with an employment-related securities penalty. This confirms that automatic late-filing penalties apply to annual returns that are filed after the relevant due date and sets out details of the further penalties that will apply and how to appeal.

To avoid these penalties, companies should ensure that they have filed their annual returns on HMRC's ERS Service by 6 July 2023.

Please get in touch with your usual Osborne Clarke contact or one of the experts below if you have any queries or would like to discuss further.